Professional Documents
Culture Documents
EXECUTIONVERSION
NOTASOLICITATIONOFVOTESONAPLAN
SubjecttoFRE408
SubjecttoJointInterestAgreement
d1941099
March 9, 2011
Midland Loan Services, a division of PNC Bank, National Association
10851 Mastin, 6th Floor, Overland Park, KS 66210
Attention: Kevin S. Semon
Vice President, Special Servicing Manager
Second Amended and Restated Binding Commitment Regarding the Acquisition and
Restructuring of Certain Subsidiaries of Innkeepers USA Trust
Five Mile Capital II Pooling REIT LLC (Five Mile Pooling), through its investment advisor Five
Mile Capital Partners LLC (collectively, Five Mile), is pleased to submit this second amended and
restated letter (this Second Amended Commitment Letter) to Midland Loan Services, a division of
PNC Bank, National Association, as special servicer for the $825.4 million Fixed Rate CMBS
Mortgage Loan (together with any successor special servicer, Special Servicer), which sets forth,
among other things, our binding commitment to provide equity capital (the Commitment) for the
restructuring of the debt and equity of certain wholly owned direct and indirect subsidiaries of
Innkeepers USA Trust (together with all of its wholly owned direct and indirect subsidiaries,
Innkeepers or the Company) that are indentified on Exhibit A attached hereto (collectively, the
Fixed/Floating Debtors), resulting in Five Mile and Lehman ALI, Inc. (Lehman and together
with Five Mile Pooling, the Plan Sponsors) directly or indirectly owning a controlling interest in
the Fixed/Floating Debtors as more fully set forth in that certain Revised Amended and Restated
Commitment Agreement between Five Mile Pooling and Lehman dated as of March 9, 2011 (the
Lehman Commitment) and that certain Amended and Restated Binding Commitment Agreement
Regarding the Acquisition and Restructuring of Certain Subsidiaries of Innkeepers USA Trust, dated
as of March 9, 2011 among the parties thereto (the Amended Debtor Commitment). The
recapitalization and debt restructuring (the Transaction) is to be effectuated through a plan of
reorganization for the Fixed/Floating Debtors (the Plan) to be filed in the United States
Bankruptcy Court for the Southern District of New York presiding over the Companys bankruptcy
cases (jointly administered as Case No. 10-13800) (the Innkeepers Bankruptcy Court) by the
Fixed/Floating Debtors with the support of Lehman, us and you. The Plan Sponsors have agreed
that the Company may file a global plan of reorganization (a Global Plan) that includes the Plan
and Chapter 11 plans of any or all of the other debtors (the Other Plans) as the Company deems
appropriate in its sole discretion. To the extent the Company files a Global Plan or Other Plans,
confirmation of the Plan shall not be conditioned on confirmation of the Other Plans.
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This Second Amended Commitment Letter shall become effective only upon the satisfaction of the
conditions to effectiveness contained in Section 12 of the Amended Debtor Commitment.
Upon effectiveness, this Second Amended Commitment Letter hereby amends, restates and
supersedes that certain Amended and Restated Binding Commitment for the Acquisition of
Innkeepers USA Trust by and between Five Mile Pooling and Special Servicer dated January 14,
2011 (the January 14 Five Mile Commitment) in its entirety. Upon effectiveness of this Second
Amended Commitment Letter, that certain Binding Commitment for the Acquisition of Innkeepers
USA Trust between Five Mile Pooling and Special Servicer dated December 10, 2010 as amended by
that certain Amendment to the Binding Commitment for the Acquisition of Innkeepers USA Trust
dated as of December 10, 2010 (as so amended, the "December 10 Five Mile Commitment") shall
be hereby terminated and of no further force or effect.
If the Plan Sponsors are the successful/winning bidders at the Auction (as defined below), it is
intended that the funding from our Commitment will be used to finance and otherwise implement a
confirmed Plan acceptable in all respects to you in your reasonable discretion, including the necessity
of REMIC compliance and consistency with grantor trust rules and regulations and the pooling and
servicing agreement, and acceptable to us in our reasonable discretion, which will provide for the
treatment of claims and other terms outlined below and in the Amended Debtor Commitment and
will otherwise comply with applicable disclosure requirements, rules of procedure and contain terms
and treatment of claims consistent with the applicable provisions of the Bankruptcy Code.
Five Mile is uniquely qualified to consummate the Transaction, given our substantial investment and
the rights we have in certain indebtedness in Innkeepers. As you know, we have funded a debtor-in-
possession financing to the Company for $53 million and have performed our due diligence of all
the hotel assets of the Fixed/Floating Debtors. As a result, we are familiar with the hotel assets of
the Fixed/Floating Debtors and operating performance thereof, gleaned from our review of public
filings and our own extensive due diligence. We also have broad investment experience in the
hospitality area and general expertise in the extended stay lodging sector.
I. Value & Proposed Capital Structure
Our Commitment and the Transaction are based on a valuation of New HoldCo (as defined below)
of $970.7 million and result in a final capital structure of $622.5 million in aggregate indebtedness
and $348.2 million in new equity, which will include funding for closing and emergence costs. The
details of the reorganized capital structure for New HoldCo are provided in Section IV below.
II. Capital Commitments; Guaranties
Subject to the conditions set forth herein, we hereby submit this binding and irrevocable offer to
provide $174.1 million of cash to fund the Transaction (a portion of which may be provided by
other investors, including an operating partner, who will manage the hotels) pursuant to which, if
the Plan Sponsors are the successful winning bidders, Five Mile, through one or more of its wholly
owned affiliates(s) or a Five Mile controlled investment vehicle, comprised of limited partners in
Five Mile Capital Partners II LP and Five Mile Capital Investment Opportunities LP, will purchase
50.0% of the New Equity for cash in an amount of $174.1 million; and (ii) Lehman, in full and final
satisfaction of all of its claims arising under or in connection with the Floating Rate Mortgage Loan
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will receive, subject to receipt of further consideration as a result of the Auction (defined below)
contemplated herein, (a) 50.0% of the New Equity and (b) $26.2 million in cash; provided, however,
that, subject to applicable law and the Plan, the Plan Sponsors may, subject to the consent of the
Company not to be unreasonably withheld, conditioned, or delayed, require the Company or the
reorganized Company as applicable to provide due diligence access (subject to an appropriate
confidentiality agreement) and to distribute up to 20% of the New Equity to a third-party investor
and/or new manager (the Third-Party Investment), and, in the event the third party investor
and/or new manager pays cash on the Effective Date (as defined below) for the New Equity in
connection with the Third Party Investment, then the amount of New Equity (and the
corresponding payment therefor) purchased by Five Mile, and the amount of New Equity (and the
corresponding payment in cash to Lehman) received by Lehman, shall be adjusted accordingly,
provided, further, however, that notwithstanding any direction by the Plan Sponsors with respect to
the Third Party Investment, Five Mile and Lehman shall remain liable for the full amount of the
Commitment. The Transaction will be effectuated consistent with the terms of this Second
Amended Commitment Letter, the Lehman Commitment and the Amended Debtor Commitment
on the effective date of the Plan (the Effective Date) (the occurrence of the Effective Date shall
be subject to the satisfaction of customary conditions, including without limitation entry of an order
confirming the Plan by the Innkeepers Bankruptcy Court that has become final and non-appealable
and the Transaction contemplated under the Plan having been closed and consummated as
contemplated thereunder on or before the Outside Date), and the Plan will also include customary
provisions with respect to waiver of conditions to the Effective Date). Five Miles intended
investment, as reflected herein, will be used to recapitalize the Fixed/Floating Debtors, and more
specifically, will be used to retire the existing DIP facilities (as they relate to the Fixed/Floating Rate
Debtors) and provide funds for future property improvement work (PIP), furniture, fixtures, and
equipment investments (FF&E), cash reserves and potential growth opportunities. Five Mile will
provide its portion of the cash investment required to consummate the Transaction from our
existing investment vehicles or Five Mile sponsored and controlled co-investment vehicles.
In addition, in connection with the Fixed Rate CMBS Mortgage Loan, (a) Five Mile Pooling will
enter into a new limited bad boy guaranty (the FM Guaranty) which shall cover the same bad
acts as the bad boy guaranty given by Grand Prix Holdings LLC in connection with the Fixed
Rate CMBS Mortgage Loan, except that Five Mile Pooling will not have any liability under the FM
Guaranty unless such bad act is actually, actively and affirmatively a direct and immediate cause of
and/or actually and affirmatively consented to by Five Mile or an affiliate that controls, is controlled
by or under common control with Five Mile and (b) the new holding company entity which owns all
the equity of the Fixed/Floating Debtors (the Parent Entity) shall enter into a new bad boy
guaranty (the Parent Guaranty), which shall cover the same bad acts as the bad boy guaranty
given by Grand Prix Holdings LLC in connection with the Fixed Rate CMBS Mortgage Loan,
except that the beneficiary of the Parent Guaranty shall have no right to enforce such Parent
Guaranty unless the Five Mile member of the joint venture between the Plan Sponsors as
contemplated by the Lehman Commitment (the FM/Lehman JV) ceases to have the right to vote
at least 34% (which is a blocking right with regards to Super Majority Decisions (as defined below))
of the equity interests in the FM/Lehman JV. Five Mile Poolings maximum liability under the FM
Guaranty shall not exceed 10% of the outstanding principal balance of the restructured Fixed Rate
CMBS Mortgage Loan from time to time for which such guaranty is provided. There shall be no
such cap on the liability of Parent Entity under the Parent Guaranty. If Five Mile desires to sell or
otherwise transfer (i) all of its interests in the FM/Lehman JV or (ii) a portion of its interest in the
FM/Lehman JV and with respect to any such partial sale or transfer, Five Mile would cease to have
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the right to vote at least 34% (which is a blocking right with regards to Super Majority Decisions) of
the equity interests in the FM/Lehman JV following such sale or transfer, then, in addition to any
other conditions to such sale or transfer set forth in the Fixed Rate CMBS Mortgage Loan
documents, as a condition to any such sale or other transfer, an entity, which has a minimum net
worth of $135 million and which is otherwise acceptable to the holder of the Fixed Rate CMBS
Mortgage Loan in its sole but reasonable discretion shall deliver a guaranty in form and substance
substantially similar to the FM Guaranty which covers bad acts actually, actively and affirmatively
a direct and immediate cause of and/or actually and affirmatively consented to by the transferee or
an affiliate that controls, is controlled by or under common control with such transferee and Five
Mile or the transferee shall pay an appropriate review fee to be set forth in the definitive
documentation.
During the term of the Fixed Rate CMBS Mortgage Loan, (x) the corporate or other governance
documents of the FM/Lehman JV and the borrowers under the Fixed Rate CMBS Mortgage Loan
the operating lessees and such other subsidiaries of the FM/Lehman JV (as may be necessary to
effectuate the provisions of this paragraph) shall provide that super-majority voting (i.e., the consent
of at least 66 2/3 % of the equity interests in the FM/Lehman JV) shall be required for the decisions
identified on Appendix B to the Lehman Commitment if such decision would result in or otherwise
constitute a bad act under the FM Guaranty (irrespective and independent of whether or not such
bad act is actually, actively and affirmatively a direct and immediate cause of and/or actually and
affirmatively consented to by Five Mile or an affiliate that controls, is controlled by or is under
common control with Five Mile) and/or the Parent Guaranty, as applicable (collectively, the Super
Majority Decisions) and (y) such Super Majority Decisions may not be amended, waived or
modified without the consent of the holder of the Fixed Rate CMBS Mortgage Loan. Nothing
contained in this Second Amended Commitment Letter shall require the Special Servicer to take any
action in violation, derogation or contravention of the terms or provisions of the Fixed Rate CMBS
Mortgage Loan documents.
The Parties acknowledge that the applicable loan and credit documents evidencing and securing the
Fixed Rate CMBS Mortgage Loan shall be assumed, amended, restated, and/or supplemented as
Special Servicer and its counsel shall reasonably require as reasonably acceptable to the reorganized
borrowers and the Plan Sponsors in order to implement the proposed treatment of the Fixed Rate
CMBS Mortgage Loan, to incorporate the terms herein and to implement the Plan.
In connection with the foregoing, we hereby confirm that we have available, and will have available
at all times prior to consummation of the Transaction or the termination of the Second Amended
Commitment Letter, investor commitments that exceed, in the aggregate, $300 million.
III. Plan Subject to Higher and Better Offers; Five Mile Free to Pursue
Other Transactions
Subject to Court approval of the Bid Procedures (as hereinafter defined), Five Mile acknowledges
that the creditor treatment proposed herein will be subject to higher and better offers through an
auction. For avoidance of doubt, our providing this Second Amended Commitment Letter does not
preclude us in any way from discussing alternate transactions, including competing plans of
reorganization, or engaging in any discussions regarding providing financing or participating in any
such alternate transactions (each, an Alternate Transaction); provided however, that other than the
Lehman Commitment and the Amended Debtor Commitment (and the transactions contemplated
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respectively thereby) we will not enter into a binding commitment with respect to, or otherwise
consummate, any Alternate Transaction prior to the occurrence of a Termination Event (as defined
in Section VIII hereof).
Special Servicer and Five Mile agree that until a Termination Event (as defined in Section VIII
hereof) occurs, Special Servicer and its affiliates and advisors shall be able to participate in
discussions regarding an Alternative Transaction; provided however, Special Servicer shall not enter
into a binding commitment with respect to, or otherwise consummate, any Alternative Transaction
prior to the occurrence of a Termination Event.
IV. Restructuring of Debt and Equity of the Company New Equity, Debt Forgiveness,
& Cash Pay Downs
A. Debt Restructurings
If the Plan Sponsors are the winning bidders at the auction, our Commitment for the Plan Sponsors
stalking horse bid contemplates a restructuring implemented through the Plan whereby the current
Fixed/Floating Debtors debt holders will realize value totaling $889.9 million (including the $3
million payment in connection with the Special Servicers release of Apollo as described below) or
71% of their $1,242.1 million current outstanding obligations. The Fixed/Floating Debtors creditor
treatment is being implemented through $622.5 million in new debt, $348.2 million in equity and
cash, $5.5 million of cash consideration for existing guarantees and servicing fees paid on behalf of
the C6 and C7 Trusts and $3.75 million ($375,000 of which shall come from Apollo) in cash to fund
certain creditor payments. The new debt also benefits from a capital structure supported by
approximately 35.9% in equity value.
An illustration and an explanation of the Plan Sponsors stalking horse bid and the resultant
Fixed/Floating Debtors creditor treatment under the Plan if the Plan Sponsors stalking horse bid is
the winning bid are detailed in Appendix A.
B. Cash Sources & Uses
Our Commitment contemplates that the cash investment of $174.1 million will be used as follows:
o Repayment of the Lehman and Five Mile DIP (as they relate to the Fixed/Floating
Debtors) in the amount of up to $64.1 million plus any accrued fees or interest due
on such facility;
o Payment of $3 million to the Special Servicer in connection with the treatment of the
Fixed Rate CMBS Mortgage Loan;
o Payment of fees to the Special Servicer of the Fixed Rate CMBS Mortgage Loan
equal to $2.5 million as consideration for effecting the restructuring transactions on
behalf of the LBUBS 2006-C6 and LBUBS 2006-C7 trusts (the C6 and C7 Trusts);
o $74.9 million of cash to cover 2011 FF&E and future PIP work (currently estimated
at approximately $22.8 million and to be verified by the parties), funding of
additional cash on the post-Effective Date balance sheet, and closing and emergence
costs;
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o Payment of $3.75 million ($375,000 of which shall come from Apollo) for the
various classes of unsecured creditors; and
o $26.2 million in cash as the Lehman Payment.
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C. Our Stalking Horse Bid and Resultant Treatment of Claims and Interests
The Amended Debtor Commitment and the Plan Sponsors stalking horse bid is comprised of
the following treatment of claims and interests:
1. Fixed Rate CMBS Mortgage Loan: Reduction of the outstanding balance to $622.5
million.
a. Non-Recourse New Mortgage Loan of $622.5 million shall have the following
terms:
i. No change to the interest rate of 6.71%;
ii. No change to maturity date of July 9, 2017;
iii. During the first 48 months after the Effective Date, interest only will be
payable monthly and amortization will begin 48 months after the
Effective Date and will be based on a 30-year amortization schedule; and
iv. Prepayment shall be permitted at par without penalty and defeasance
requirements will be waived; and
b. Property release provision whereby the properties may be released at 108% of
the new allocated loan amount, so long as the debt service coverage ratio
thereunder, after giving effect to such release, is no worse than such ratio prior
to such release or if the foregoing is not consistent with the then applicable
REMIC rules and regulations such other provision that is acceptable to the
Company and you which is consistent with then applicable REMIC rules and
regulations, the grantor trust rules and regulations and the pooling and servicing
agreement. Notwithstanding anything to the contrary, any property release
contemplated herein can only be effected in accordance with applicable REMIC
rules and regulations, the grantor trust rules and regulations and the pooling and
servicing agreement;
c. The Plan shall provide that the Special Servicer, on behalf of the C6 and C7
Trusts, shall (i) settle, release, and waive all of the Special Servicers claims against
Apollo Investment Corporation (Apollo), related in any way to that certain
Required Capital Improvements Guaranty executed by Apollo on June 29, 2007
(the Apollo Guaranty) and (ii) if an action remains pending in the State Courts
of New York or elsewhere, the Special Servicer shall dismiss its claims against
Apollo with prejudice. The effectiveness of such settlement, release, and waiver
is conditioned on the receipt by Special Servicer of indefeasible payment as
provided in the next sentence and shall be embodied in, and shall not be
effective unless and until, the Global Release (as defined herein) has been
1 Subject to adjustment based on participation in the Third-Party Investment. For example, if Lehman were to
own 40% of the New Equity (i.e., assuming 20% of the New Equity is sold pursuant to the Third-Party Investment),
then the cash payment to Lehman would be $61.0 million. Accordingly, in this example, the New Cash would
increase by $34.8 million to a total of $208.9 million.
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agreed upon between the Plan Sponsors and the Fixed/Floating Debtors;
provided that it votes to accept and otherwise supports the Plan.
b. Unsecured Debt: Cash (of which Apollo Investment Corporation will fund
$375,000, subject to receipt of each of the releases described below) in the
amount of the lesser of $3.75 million and 65% of the face amount of the general
unsecured claims against the Fixed/Floating Debtors (excluding any deficiency
claims) that are not otherwise paid pursuant to a first day order (the
Unsecured Claims) shall be available for distribution to the holders of
Unsecured Claims (the Unsecured Claims Fund); further, the Fixed/Floating
Debtors shall release and waive all preferences under section 547 of the
Bankruptcy Code and, to the extent related thereto, section 550 of the
Bankruptcy Code.
4. Existing Equity of the Fixed/Floating Debtors and Issuance of New Equity: Holders of
common, preferred, and any other equity interests in the Fixed/Floating Debtors shall
receive no distributions under the Plan on account of such interests. An entity that is
newly formed by the Plan Sponsors (New HoldCo) will acquire 100% of the indirect
and direct equity of reorganized Grand Prix Mezz Borrower Fixed, LLC, reorganized
Grand Prix Mezz Borrower Floating, LLC, reorganized Grand Prix Fixed Lessee, LLC,
and Grand Prix Floating Lessee, LLC, and such other assets as may be subsequently
identified as necessary to the operation of the Fixed/Floating Debtors provided,
however, that no assets of the Excluded Debtors
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(defined below), including, without
limitation, cash or cash equivalents, shall be included in the transaction contemplated by
the Transaction. New HoldCo will issue equity (the New Equity) as set forth below
upon the Effective Date. The ultimate corporate structure for the reorganized
Fixed/Floating Debtors shall be determined prior to the Effective Date of the Plan, by
the Plan Sponsors in their sole discretion (and consistent with this Second Amended
Commitment Letter) and will be described in a plan supplement document to be filed no
later than ten (10) days before the scheduled date for the confirmation hearing for the
Plan.
5. Application of Existing Cash on the Effective Date: The Company shall seek to amend
the Final Cash Collateral Order, with the support of Lehman and the Special Servicer, to
increase the amount of cash that may be held back as an expense reserve to $14.9 million
in order to account for certain closing and emergence costs of the Fixed/Floating
Debtors, including potential success fees, in substantially the form attached as Appendix
C to the Amended Debtor Commitment. Special Servicer and Five Mile agree that any
cash at the Company that is the property of the Fixed/Floating Debtors or as of the
Effective Date that is subject to application for disbursement, payment, repayment, or
distribution for the Fixed/Floating Debtors under the Final Cash Collateral Order,
whether or not applied prior to the Effective Date, shall be applied to satisfy
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Excluded Debtors shall mean the Innkeepers debtors other than the Fixed/Floating Debtors. The Excluded
Debtors are excluded from the Transaction, and the Plan Sponsors will not be the stalking horse for the Excluded
Debtors or their assets. The Company may continue to market the assets of the Excluded Debtors independently from
the assets of the Fixed/Floating Debtors.
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administrative claims incurred but unpaid as of the Effective Date and to consummate
the transaction contemplated herein pursuant to the waterfall set forth in the Final Cash
Collateral Order (as shall be amended to increase the amount of cash held back as an
expense reserve, in order to account for certain closing and emergence costs, including
potential success fees). After the Effective Date, cash will be administered and applied
pursuant to the applicable cash management procedures under the applicable loan
documents, and the waterfall set forth in the Final Cash Collateral Order will no longer
govern.
V. Offer Structure and Protections
The Company will solicit higher and better offers for 100% of the New Equity to be issued pursuant
to the Plan through an auction (the Auction) on the terms set forth herein. We require that there
be an Auction of the Fixed/Floating Debtors on an enterprise basis where the Plan Sponsors will be
the stalking horse bidder at the Auction with initial stalking horse bids to be as described herein and
in the Amended Debtor Commitment and bid protections set forth below. To that end, we require
the Bankruptcy Courts entry of an order (the Bid Procedures Order) approving bid procedures
(the Bid Procedures) which include the following terms:
Bids will be solicited for up to forty-five (45) calendar days following the date of the entry of the
Bid Procedures Order and the Auction shall commence no later than 50 days following the date
of the entry of the Bid Procedures Order.
Bids, to be deemed a qualified bid and eligible to participate in the Auction, must be
accompanied by a cash deposit in the amount of $20 million to an interest bearing escrow
account to be identified, established, and held by and in the name of the Company;
Bidders must be qualified on terms reasonably acceptable to the Company after consultation
with the Special Servicer and the Creditors Committee, which consultation shall include, subject
to confidentiality agreements reasonably acceptable to the Company and the Special Servicer and
the Creditors Committee, disclosure of the bidders, their qualifications, and their bids;
All bids and overbids, to be deemed a qualified bid and eligible to participate in the Auction, and
whether made prior to or at the Auction, must be enterprise bids for all of and only the assets of
the Floating Rate Debtors and the Fixed Rate Debtors and either be (i) comprised entirely of
cash or (ii) based on the debt and capital structure and sources and uses of funds outlined herein
and in Appendix A, on terms substantially similar to those provided herein (including but not
limited to the guarantees provided to Special Servicer and the other terms, conditions, and
treatment as set forth herein);
The initial Overbid of the implied value must be at least $15 million higher (in cash and inclusive
of the Stalking Horse Fee (as defined below)) than the implied value of the Plan Sponsors Bid
and based on the debt and capital structure and sources and uses of funds outlined herein and in
Appendix A (the Initial Minimum Overbid), and subsequent bids must be in increments of at
least $5 million and based on the debt and capital structure and sources and uses of funds
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outlined herein and in Appendix A (each qualifying initial and subsequent overbid,
an Overbid);
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The percentage increase in the implied enterprise value of the winning bidder will be allocated to
each collateral pool (the Overbid Allocation) by increasing the debt or cash consideration that
such collateral pool is receiving under the Plan in proportion to the incremental Overbid
amount (e.g., if a collateral pool is receiving a new mortgage under the Plan in the face amount
of $100, then a winning Overbid that is 4% greater than the Plan Sponsors Bid would result in
that collateral pool receiving a mortgage in the face amount of $104; the same would apply to
cash consideration); provided, however, that the amount of the incremental Overbid
consideration not allocated to collateral pools under the Overbid Allocation shall be allocated to
each collateral pool pro rata based on the respective percentage of consideration value allocated
to each of the respective collateral pools against which such respective collateral pool has a claim
or from which it is entitled to payment and such non-allocated amount shall flow through the
Companys corporate and debt and equity structure for purposes of payment satisfying
prepetition claims and interests and determining the ultimate recipients of such Overbid;
provided, further, however, that to the extent any winning Overbid includes debt consideration
to the Special Servicer in excess of the amounts provided in Appendix A, such additional debt
shall be valued based on a net present value analysis using an 8% discount rate (the mechanics of
such valuation to be agreed upon between the Plan Sponsors, Special Servicer, and the
Company);
In the event the winning bidder is not the Plan Sponsors (which includes any wholly-owned
subsidiary of Five Mile), the Floating Rate Mortgage Loan shall be repaid in cash in an amount
determined in accordance with the Overbid Allocation (assuming an allocation of $200.3 million
of value to the Floating Rate Mortgage Loan in the Plan Sponsors Bid);
In the event that the application of the Overbid Allocation would cause any prepetition holders
recovery to exceed such holders allowed claim, then such amount will be capped by the amount
of the allowed claim and any excess Overbid Allocation will be allocated through and in
accordance with the corporate and debt and equity structure for purposes of determining the
ultimate recipients of such Overbid value;
The determination of the winning bidder at the Auction shall be made by the Company only
after consulting with the Special Servicer relating to the Bids made at the Auction;
To be deemed a qualified bid and eligible to participate in the Auction, the equity consideration
of such bid must have a value of at least $363.2 million (comprised of the $348.2 million equity
value as set forth herein and $15 million on account of the Initial Minimum Overbid) to be used
for, among other things, the following on the Effective Date: (a) $46.6 million in cash to satisfy
claims on account of the Five Mile DIP; (b) $17.5 million in cash to satisfy claims on account of
the Solar DIP; (c) at least $22.8 million in cash to fund future property improvement plan work
and furniture, fixtures, and equipment reserves; (d) at least $10 million in cash to pay all
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Note that the Midland Financing shall be no more than $622.5 million plus 70% of the
Overbid amount (minus $15 million).
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administrative and other claims and expenses not paid pursuant to the Final Cash Collateral
Order (as to be amended as set forth below) [Docket No. 402] that are necessary for the
Fixed/Floating Debtors to emerge from bankruptcy;4 (e) at least $41.6 million in cash for New
HoldCo; (f) with respect only to qualified bids other than the Amended Debtor Commitment
and this Second Amended Commitment Letter, at least $200.3 million in cash to pay Lehmans
claims against the Fixed/Floating Debtors (plus any applicable Overbid Allocation); and (g) to
the extent the bid is submitted by a competing bidder, $10 million in cash to satisfy the $7.0
million Break-Up Fee and the up to $3.0 million Expense Reimbursement; and
A bid submitted by or through a holder of a secured claim against the Company shall not be
deemed a qualified bid and eligible to participate in the Auction if the bid contemplates the
ability of secured creditors to credit bid their claims against the Company within the meaning of
sections 363(k) or 1129(b)(2)(A)(ii) of the Bankruptcy Code; provided that all rights with respect
to a creditors ability to credit bid under both applicable non-bankruptcy and bankruptcy law are
expressly reserved to the extent that (i) the auction process contemplated in the Bid Procedures
is terminated or abandoned, (ii) the Special Servicer is no longer obligated to support this Term
Sheet or the New Party/Midland Commitment (as defined in, and attached as Exhibit C to, the
Bid Procedures Motion), (iii) Lehman terminates the Amended Debtor Commitment, (iv) the
Plan is not confirmed, or (v) the Effective Date shall not have occurred by September 15, 2011.
The Bid Procedures Order will provide that, to the extent the Amended Debtor Commitment has
not terminated as a result of a Plan Sponsor Breach (as defined in the Amended Debtor
Commitment), in the event of (i) an Overbid in which Plan Sponsors Bid is not the winning bid
(an Overbid Transaction) or (ii) the Companys execution of an agreement to pursue an alternative
transaction for any of the assets of the Fixed/Floating Debtors after entry of the Bid Procedures
Order (the Alternative Transaction), the Plan Sponsors will receive a breakup fee in the amount of
$7 million (the Break-Up Fee) plus reimbursement of all of Five Miles reasonable and
documented fees and expenses, not to exceed $3 million (the Expense Reimbursement and
together with the Break-Up Fee, the Stalking Horse Fee). Twenty-five percent (25%) of the
Break-Up Fee may be allocated to Lehman as consideration for Lehmans agreement to fund a
portion of the capital necessary for the Fixed/Floating Debtors to emerge from bankruptcy, as has
been mutually agreed between Lehman and Five Mile, with the remainder allocated to Five Mile.
Other than terminating their obligations in accordance with this Second Amended Commitment
Letter and the Amended Debtor Commitment, the Plan Sponsors sole remedy at law and in equity
against the Company in the event of an Overbid Transaction or Alternative Transaction shall be
receipt of the Break-Up Fee and Expense Reimbursement as liquidated damages, provided,
however, that (i) nothing in the Amended Debtor Commitment shall limit any rights and remedies at
law or in equity that the Plan Sponsors have or may have as creditors of the Company and (ii) if
there is a material breach by the Company of the Amended Debtor Commitment or the Term Sheet
that results in a termination of the Amended Debtor Commitment, and provided the Plan Sponsors
are not entitled to the Stalking Horse Fee, the Plan Sponsors damages for such material breach shall
be capped at $10 million.
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For the avoidance of doubt, to the extent the Fixed/Floating Debtors incur administrative expense claims in
excess of the $10 million estimate, the Successful Bidder (as defined below) shall be required to fund such amounts.
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The Stalking Horse Fee, if any, shall be payable by the Fixed/Floating Debtors upon the earlier of (i)
the Effective Date and (ii) consummation of an Alternative Transaction.
The Company will file the Plan, a disclosure statement for the Plan (Disclosure Statement), and
request a hearing for approval of the Disclosure Statement and seek confirmation of the Plan.
Each of the foregoing and subsequent pleadings (including the Bid Procedures Order) shall be
acceptable in all respects to the Plan Sponsors and the Special Servicer in each of their respective
reasonable discretion.
Special Servicer confirms that, other than the sale of equity interests in New HoldCo, the Plan will
not contemplate or provide for a sale of the Company or any of its assets pursuant to section
1129(b)(2)(a)(ii) or (iii) or section 363 of the Bankruptcy Code.
5
As such, no holder of a lien on any
asset of the Company shall be permitted to credit bid its claim as part of the Plan.
If the Company seeks an order requesting authority from the Innkeepers Bankruptcy Court to
reimburse the reasonable and documented expenses of Bidder D, incurred prior to December 15,
2010, in an amount not greater than $500,000, provided that the Break-Up Fee and Expense
Reimbursement have been approved by the Innkeepers Bankruptcy Court, Five Mile and Special
Servicer confirm that they shall not object to such request and to the payment of such expenses by
the Company at the conclusion of the Auction, so long as Bidder D is not the successful winning
bidder at the Auction.
VI. Strength of the Stalking Horse Bid and the Proposed Plan
We believe the Transaction and the Plan (consistent with the terms of this Second Amended
Commitment Letter and the Amended Debtor Commitment) is beneficial to all creditors and is in
the best interests of the Company and its bankruptcy estates. The Plan values the Fixed/Floating
Debtors at $970.7 million and the current debt is reduced through debt forgiveness, pay down and
equity conversion post-confirmation to approximately $622.5 million. Further, there is high
certainty and low execution risk with the Plan, financed by our Commitment, as it will provide for
the exit financing component critical to the success and emergence of Innkeepers from bankruptcy.
There is no due diligence condition.
We believe the Plan also provides additional stability for the Fixed/Floating Debtors by providing
adequate cash to pay exit costs, fund $7.8 million of FF&E reserve contribution for the first year of
the restructured Fixed Rate CMBS Mortgage Loan (which funds shall be held by the Master Servicer
of the Fixed Rate CMBS Mortgage Loan), and provide general cash liquidity to be held at New
5
The Parties acknowledge that all rights with respect to a creditor's ability to credit bid under both applicable
nonbankruptcy and bankruptcy law are expressly reserved to the extent that (a) the auction process contemplated in the
Bid Procedures is terminated or abandoned, (b) Special Servicer is no longer obligated to support the Term Sheet
attached to the Amended Debtor Commitment or the Amended and Restated Agreement Relating to Midland
Commitment to Support Amended Debtor Commitment with New Party under Certain Circumstances dated as of
March 9, 2011 by and among Grand Prix Holdings, LLC, Innkeepers USA Trust and Special Servicer, (c) Lehman
terminates the Amended Debtor Commitment, (d) the plan of reorganization that encompasses the provisions provided
for hereinor the winning Bid through the auction process described in (a) is not confirmed, or (e) Effective Date shall
not have occurred by September 15, 2011.
13
HoldCo (includes amounts for future PIPs) to manage seasonality within the business, cover
operating or interest shortfalls should they occur, and provide funds to pay administrative and
priority expenses upon emergence.
Further, the Plan shall include a mutual full discharge, release and exculpation of liability, and
injunction (the Global Release), to the maximum extent of applicable law, other than a release of
the obligations undertaken herein and in the Plan and other Transaction documents, by and among
(each against one another) the Fixed/Floating Debtors, the Plan Sponsors, Special Servicer,
(including the master servicer for the Fixed Rate Mortgage Loan, the C6 and the C7 Trusts and
trustees), Apollo, and other holders of claims against and interests in the Fixed/Floating Debtors,
each of their respective predecessors, successors and assigns, shareholders, affiliates, subsidiaries,
principals, employees, agents, officers and directors, trustees, members, master servicers, special
servicers, trusts and trustees, and professionals (including the officers, directors, members and
trustees of the Parent Companies,
6
in their capacities as such) from the following: (i) any and all
claims and causes of action relating to the Fixed/Floating Debtors arising prior to the Effective
Date, and in connection therewith, shall confirm and adjudicate the validity, enforceability and
perfection, in all respects, of the liens, claims, interests, mortgages and encumbrances of the Fixed
Rate Mortgage Loan, the C6 and the C7 Trusts; and (ii) any and all claims arising from the actions
taken or not taken in good faith in connection with the Transaction and the Chapter 11 cases;
provided, however, Island Hospitality Management, Inc. shall not be entitled to a release unless it
reasonably cooperates with Plan Sponsors, New HoldCo, and the new manager. It is expressly
understood and agreed, that notwithstanding anything otherwise contained herein or in the
Amended Debtor Commitment, the (i) releases of Apollo and the stipulation of discontinuance of
the Apollo Guaranty litigation and (ii) the waivers and releases to be given by Apollo that are
described herein shall not be effective until the Special Servicer has received the $3 million cash
payment provided for herein and the occurrence of the Effective Date, which shall include that the
Global Release has been embodied in the order confirming the Plan as entered in the Innkeepers
Bankruptcy Court that has become final and become non-appealable.
We are ready to move forward and have all the resources, including available funds, to conclude the
transactions outlined in this Second Amended Commitment Letter and the Amended Debtor
Commitment.
VII. Special Servicer Covenants
The Company, Lehman, Five Mile Pooling and the Special Servicer have entered into the Amended
Debtor Commitment whereby the Company has agreed to prosecute the Plan described herein. The
Special Servicer by virtue of its execution of the Amended Debtor Commitment intends to proceed
and perform its undertakings contained therein. For as long as no Termination Event has occurred
under the Amended Debtor Commitment, and no Termination Event has occurred hereunder, the
Special Servicer hereby covenants to support the provisions of the Term Sheet (the Term Sheet)
as provided for therein, which is included in the Amended Debtor Commitment (including the Plan,
Transaction, Auction, and the Bid Procedures Order, each as set forth in the Term Sheet).
6
Parent Companies shall mean Grand Prix Holdings LLC, Innkeepers USA Trust, Innkeepers Financial Corporation,
and Innkeepers USA Limited Partnership.
14
Transaction in each case in form and substance satisfactory to Five Mile in each of our
reasonable discretion; provided, however, that this Termination Event shall not apply to the
Chapter 11 case of Grand Prix West Palm Beach LLC;
4. any material breach by Special Servicer or Five Mile of, or material, non-compliance with,
the agreements set forth in this Second Amended Commitment Letter;
5. mutual agreement of Special Servicer and Five Mile to terminate this Second Amended
Commitment Letter;
6. termination (other than by expiration of the term in the normal course) or rejection of any
franchise agreement deemed necessary by the Plan Sponsors or Special Servicer prior to the
Effective Date without the Plan Sponsors and Special Servicers written approval with respect to
the assets of the Fixed/Floating Debtors; provided, however, this shall not be a termination
event if the Plan Sponsors elect to pursue the transaction contemplated herein with no
modifications to the treatment, including the economics thereof, of the Fixed Rate CMBS
Mortgage Loan; provided, further however, that this Termination Event shall not apply to the
Chapter 11 case of Grand Prix West Palm Beach LLC;
7. failure by Company to assume and, if necessary, assign all franchise agreements pursuant to
an order of the Court satisfactory to the Plan Sponsors or the Special Servicer in all material
respects on or before the Effective Date with respect to the assets of the Fixed/Floating
Debtors; provided, however, this shall not be a termination event if the Plan Sponsors elect to
pursue the transaction contemplated herein with no modifications to the treatment, including
the economics thereof, of the Fixed Rate CMBS Mortgage Loan; provided, further however, that
this Termination Event shall not apply to the Chapter 11 case of Grand Prix West Palm Beach
LLC;
8. immediately on or prior to the hearing on the Bidding Procedures (as defined in the
Amended Debtor Commitment), failure by the Plan Sponsors to identify a list of property
managers reasonably acceptable to Special Servicer and Five Mile in all material respects for the
management of the hotels;
9. prior to the Effective Date, the change of any of the Super Majority Decisions and/or voting
requirements for Super Majority Decisions as established in the Lehman Commitment;
10. the occurrence of any termination event under the Lehman Commitment;
11. the occurrence of any termination event under the Amended Debtor Commitment.
Time is of the essence with respect to the Termination Events.
IX. Miscellaneous
All notices, requests, claims, demands and other communications hereunder shall be given (and shall
be deemed to have been duly received if given) by hand delivery in writing or by facsimile
transmission with confirmation of receipt, as follows:
16
if to Five Mile:
Three Stamford Plaza
301 Tresser Boulevard, Ninth Floor
Stamford, CT 06901
Attention: James G. Glasgow, Jr.
Email: jglasgow@fivemilecapital.com
Facsimile: (203) 905-0954
With a copy to:
Kasowitz, Benson, Torres & Friedman LLP
1633 Broadway
New York, New York 10019
Attention: Adam L. Shiff
Email: ashiff@kasowitz.com
Facsimile: (212) 506-1000
if to Special Servicer:
Midland Loan Services, a division of PNC Bank, National
Association
10851 Mastin, 6th Floor
Overland Park, KS 66210
Attention: Kevin S. Semon
Email: kevin.semon@midlandls.com
Facsimile: (913) 253-9723
With a copy to:
Haynes and Boone, LLP
30 Rockefeller Plaza, 26
th
Floor
New York, New York 10112
Attention: Lenard M. Parkins and Lawrence Mittman
Email: lenard.parkins@haynesboone.com
lawrence.mittman@haynesboone.com
Facsimile: (212) 884-8226
(212) 884-8219
This Second Amended Commitment Letter, the rights of the parties, and all actions arising in whole
or part under or in connection herewith will be governed by and construed in accordance with the
laws of the State of New York.
This Second Amended Commitment Letter constitutes the entire agreement between the parties and
supersedes any and all prior discussions, negotiations, proposals, undertakings, understandings and
agreements, whether written or oral, between you (or the Company), on the one hand, and us, on
the other hand. No material modification or waiver of any provision hereof shall be enforceable
17
unless approved by you and us in writing. Neither you, on the one hand, nor us, on the other hand,
is relying upon any statement or representation made by or on behalf of the other, except as
expressly provided in this Second Amended Commitment Letter. This Amended Commitment
Letter shall not be assignable by any party hereto without the prior written consent of the other
party hereto (and any attempted assignment without such consent shall be null and void ab initio).
We are prepared to enter into a transaction on the terms set forth herein. Upon receipt of a fully
executed counterpart to this Second Amended Commitment Letter, both parties agree to negotiate
in good faith regarding the implementation of the Transaction contemplated in this Second
Amended Commitment Letter, including engaging in the preparation and negotiation of definitive
documents, and Special Servicer agrees to move forward with its undertakings described in Section
VII herein.
Remainder of Page Intentionally Blank
Signature Pages to Follow
FIVE
MILE
FJVF. Mri.F. CAPITAL PARTNERS
THREE STAMFORD PLAZA, 9TH FLOOR
STAMFORD. CONNECTICUT o6901
TELEPHON I! ZOJ90S09jO
PACSJMILI! 20J9<>S09S1
NOT A SOLICITATION OF VOTES ON A PLAN
Subject to FRE 408
Subject to Joint Interest Agreement
Should you have any questions regarding this Amended Commitment Letter, please do not hesitate
to contact James Glasgow Qglasgow@fmcp.com) orAl Nickerson (anickerson@fmcp.com) at (203)
905-0950.
Sincerely yours,
Five Mile Capital II Pooling REIT LLC,
By:
its manager
MaraaJing Director
fiVE MilE PITAL PARTNERS
Acknowledged and Agreed:
Midland Loan Services, a division of PNC Bank, National Association,
as Special Servicer for U.S. Bank, National Association as Trustee for the Registered
Holders of LB-UBS Commercial Mortgage Trust 2007 -C6, Commercial Mortgage Pass-Through
Certificates successor trustee to Bank of America National Association
By:
Tide:
EXHIBIT A
FIXED/FLOATING DEBTORS
The Floating Rate Debtors are Grand Prix Atlantic City LLC; Grand Prix Montvale LLC; Grand Prix Ft.
WayneLLC;GrandPrixGrandRapidsLLC;GrandPrixHarrisburgLLC;GrandPrixOntarioLLC;GrandPrix
Troy (Central) LLC; Grand Prix Troy (SE) LLC; KPA/GP Valencia LLC; Grand Prix Albany LLC; Grand Prix
Woburn LLC; KPA/GP Louisville (HI) LLC; KPA/GP Ft. Walton LLC; Grand Prix Rockville LLC; Grand Prix
MorristownLLC;GrandPrixAddison(SS)LLC;GrandPrixBulfinchLLC;GrandPrixEastLansingLLC;Grand
PrixIndianapolisLLC,andGrandPrixWestPalmBeach,LLC.
The Fixed Rate Debtors are Grand Prix Ft. Lauderdale LLC; Grand Prix Addison (RI) LLC; Grand Prix
AltamonteLLC;GrandPrixArlingtonLLC;GrandPrixAtlanta(PeachtreeCorners)LLC;GrandPrixAtlanta
LLC;GrandPrixBellevueLLC;GrandPrixBinghamtonLLC;GrandPrixBothellLLC;GrandPrixCampbell/
San Jose LLC; Grand Prix Cherry Hill LLC; Grand Prix Chicago LLC; Grand Prix Denver LLC; Grand Prix
Englewood / Denver South LLC; Grand Prix Fremont LLC; Grand Prix Gaithersburg LLC; Grand Prix
LexingtonLLC;GrandPrixLivoniaLLC;GrandPrixLouisville(RI)LLC;GrandPrixLynnwoodLLC;GrandPrix
Mountain View LLC; Grand Prix Portland LLC; Grand Prix Richmond LLC; Grand Prix Richmond
(Northwest)LLC;GrandPrixSaddleRiverLLC;GrandPrixSanJoseLLC;GrandPrixSanMateoLLC;Grand
Prix Shelton LLC; Grand Prix Sili I LLC; Grand Prix Sili II LLC; Grand Prix Tukwila LLC; Grand Prix Windsor
LLC;GrandPrixHorshamLLC;GrandPrixColumbiaLLC;GrandPrixGermantownLLC;GrandPrixIslandia
LLC; Grand Prix Lombard LLC; Grand Prix Naples LLC; Grand Prix Schaumburg LLC; Grand Prix
Westchester LLC; Grand Prix Willow Grove LLC; Grand Prix Belmont LLC; Grand Prix El Segundo LLC;
GrandPrixLasColinasLLC;andGrandPrixMt.LaurelLLC.
The Other Plan Debtors are Grand Prix Floating Lessee LLC; Grand Prix Fixed Lessee LLC; Grand Prix
MezzBorrowerFloating,LLC;GrandPrixMezzBorrowerFloating2,LLC;andGrandPrixMezzBorrower
Fixed,LLC.
The Fixed/Floating Debtors are the Floating Rate Debtors, the Fixed Rate Debtors, and the Other
Plan Debtors. The Fixed/Floating Debtors own and/or operate the assets that serve as collateral for
theFloatingRateMortgageLoanandtheFixedRateMortgageLoan.
APPENDIXA
7
7
Appendix A (and all of the statements contained herein) is proffered in the nature of a settlement
proposalinfurtheranceofsettlementdiscussions,andisintendedtobeentitledtotheprotectionofRule408of
the Federal Rules of Evidence and any other applicable statutes or doctrines protecting the use or disclosure of
confidential information and information exchanged in the context of settlement discussions, and shall not be
treatedasanadmissionregardingthetruth,accuracyorcompletenessofanyfactortheapplicabilityorstrengthof
anylegaltheory.
ILLUSTRATIVE SOURCES AND USES SCHEDULE
($ in millions)
Sources Uses
New Cash
(a)
$174.1 Lehman Mortgage Payment
(a)
$26.2
Apollo Contribution 0.4 Repayment of Solar DIP Financing 17.5
Repayment of Five Mile DIP Financing 46.6
Unsecured Creditors Payment 3.8
Apollo Guaranty Settlement 3.0
Special Servicer Cash Payment 2.5
Balance Sheet Cash
(b)
74.9
Total $174.5 $174.5
K&E 18532826
EXHIBIT F2
Comparison of Five Mile / Midland Commitment filed
January 14, 2011 against Amended Five Mile / Midland Commitment
EXECUTION VERSION
NOT A SOLICITATION OF VOTES ON A PLAN
Subject to FRE 408
Subject to Joint Interest Agreement
d-1926909 Execution Version1941099
January 14,March 9, 2011
Midland Loan Services, a division of PNC Bank, National Association
10851 Mastin, 6th Floor, Overland Park, KS 66210
Attention: Kevin S. Semon
Vice President, Special Servicing Manager
Second Amended and Restated Binding Commitment forRegarding the Acquisition and
Restructuring of Certain Subsidiaries of Innkeepers USA Trust
Five Mile Capital II Pooling REIT LLC (Five Mile Pooling), through its investment advisor Five
Mile Capital Partners LLC (collectively, Five Mile), is pleased to submit this second amended and
restated letter (this Second Amended Commitment Letter) to Midland Loan Services, a division
of PNC Bank, National Association, as special servicer for the $825.4 million Fixed Rate CMBS
Mortgage Loan (together with any successor special servicer, Special Servicer), which sets forth,
among other things, our binding commitment to provide equity capital (the Commitment) for the
restructuring of the debt and equity of Grand Prix Holdings LLC andcertain wholly owned direct
and indirect subsidiaries of Innkeepers USA Trust and their(together with all of its wholly
owned direct and indirect subsidiaries (collectively , Innkeepers or the Company) that are
indentified on Exhibit A attached hereto (collectively, the Fixed/Floating Debtors),
resulting in Five Mile and Lehman ALI, Inc. (Lehman and together with Five Mile Pooling, the
Plan Sponsors) directly or indirectly owning a controlling interest in the reorganized
CompanyFixed/Floating Debtors as more fully set forth in that certain Revised Amended and
Restated Commitment Agreement between Five Mile Pooling and Lehman dated as of January
14,March 9, 2011 (the Lehman Commitment) and that certain Commitment Letter among
Lehman, Five Mile, Special Servicer and the Company, dated as of January 14, 2011 Amended and
Restated Binding Commitment Agreement Regarding the Acquisition and Restructuring of
Certain Subsidiaries of Innkeepers USA Trust, dated as of March 9, 2011 among the parties
thereto (the Amended Debtor Commitment). The recapitalization and debt restructuring (the
Transaction) is to be effectuated through a plan of reorganization for the Fixed/Floating
Debtors (the Plan) to be filed in the United States Bankruptcy Court for the Southern District of
New York presiding over the Companys bankruptcy cases (jointly administered as Case No. 10-
13800) (the Innkeepers Bankruptcy Court) by the CompanyFixed/Floating Debtors with the
support of Lehman, us and you. The Plan Sponsors have agreed that the Company may file a
global plan of reorganization (a Global Plan) that includes the Plan and Chapter 11 plans
of any or all of the other debtors (the Other Plans) as the Company deems appropriate in
2
its sole discretion. To the extent the Company files a Global Plan or Other Plans,
confirmation of the Plan shall not be conditioned on confirmation of the Other Plans.
This Second Amended Commitment Letter shall become effective only upon the satisfaction
of the conditions to effectiveness contained in Section 12 of the Amended Debtor
Commitment.
Upon effectiveness, this Second Amended Commitment Letter hereby amends, restates and
supersedes that certain Amended and Restated Binding Commitment for the Acquisition of
Innkeepers USA Trust by and between Five Mile Pooling and Special Servicer dated January 14,
2011 (the January 14 Five Mile Commitment) in its entirety. Upon effectiveness of this
Second Amended Commitment Letter, that certain Binding Commitment for the
Acquisition of Innkeepers USA Trust between Five Mile Pooling and Special Servicer dated
December 10, 2010 as amended (the December 10 Commitment Letter) except as provided in
Section VII herein. It is expressly acknowledged by the parties hereto that the Special Servicer is not
a party to the Lehman Commitment and is only a party to the Debtor Commitment to the extent set
forth therein.by that certain Amendment to the Binding Commitment for the Acquisition of
Innkeepers USA Trust dated as of December 10, 2010 (as so amended, the "December 10
Five Mile Commitment") shall be hereby terminated and of no further force or effect.
If the Plan Sponsors are the successful/winning bidders at the auctionAuction (as defined below),
it is intended that the funding from our Commitment will be used to finance and otherwise
implement a confirmed Plan acceptable in all respects to you in your reasonable discretion, including
the necessity of REMIC compliance and consistency with grantor trust rules and regulations and the
pooling and servicing agreement, and acceptable to us in our reasonable discretion, which will
provide for the treatment of claims and other terms outlined below and in the Amended Debtor
Commitment and will otherwise comply with applicable disclosure requirements, rules of procedure
and contain terms and treatment of claims consistent with the applicable provisions of the
Bankruptcy Code.
Five Mile is uniquely qualified to consummate the Transaction, given our substantial investment and
the rights we have in certain indebtedness in Innkeepers. As you know, we have funded a debtor-in-
possession financing to the Company for $53 million and have performed our due diligence of all
73the hotel assets of the Fixed/Floating Debtors. As a result, we are familiar with the
Companyshotel assets of the Fixed/Floating Debtors and operating performance thereof,
gleaned from our review of public filings and our own extensive due diligence. We also have broad
investment experience in the hospitality area and general expertise in the extended stay lodging
sector.
I. Value & Proposed Capital Structure
Our Commitment and the Transaction are based on a valuation of the CompanyNew HoldCo (as
defined below) of $1,138.7970.7 million and result in a final capital structure of $790.5622.5 million
in aggregate indebtedness and $348.2 million in new equity, which will include funding for closing
and emergence costs. The details of the reorganized capital structure for the CompanyNew
HoldCo are provided in Section IV below.
3
II. Capital Commitments; Guaranties
Subject to the conditions set forth herein, we hereby submit this binding and irrevocable offer to
provide $174.1 million of cash to fund the Transaction (a portion of which may be provided by
other investors, including an operating partner, who will manage the hotels) pursuant to which, if
the Plan Sponsors are the successful winning bidders, Five Mile, through one or more of its wholly
owned affiliates(s) or a Five Mile controlled investment vehicle, comprised of limited partners in
Five Mile Capital Partners II LP and Five Mile Capital Investment Opportunities LP, will purchase
50.0% of the New Equity for cash in an amount of $174.1 million; and (ii) Lehman, in full and final
satisfaction of all of its claims arising under or in connection with the Floating Rate Mortgage Loan
will receive, subject to receipt of further consideration as a result of the Auction (defined below)
contemplated herein, (a) 50.0% of the New Equity and (b) $26.2 million in cash, subject, in each
case, to adjustment for the Co-Investment Right (as defined below); provided, however, that, subject
to applicable law and the Plan, the Plan Sponsors may, subject to the consent of the Company not
to be unreasonably withheld, conditioned, or delayed, require the Company or the reorganized
Company as applicable to provide due diligence access (subject to an appropriate confidentiality
agreement) and to distribute up to 20% of the New Equity to a third-party investor and/or new
manager (the Third-Party Investment), and, in the event the third party investor and/or new
manager pays cash on the Effective Date (as defined below) for the New Equity in connection with
the Third Party Investment, then the amount of New Equity (and the corresponding payment
therefor) purchased by Five Mile, and the amount of New Equity (and the corresponding payment
in cash to Lehman) received by Lehman, shall be adjusted accordingly, provided, further, however,
that notwithstanding any direction by the Plan Sponsors with respect to the Third Party Investment,
Five Mile and Lehman shall remain liable for the full amount of the Commitment. The Transaction
will be effectuated consistent with the terms of this Second Amended Commitment Letter, the
Lehman Commitment and the Amended Debtor Commitment on the effective date of the Plan
(the Effective Date) (the occurrence of the Effective Date shall be subject to the satisfaction of
customary conditions, including without limitation entry of an order confirming the Plan by the
Innkeepers Bankruptcy Court that has become final and non-appealable and the Transaction
contemplated under the Plan having been closed and consummated as contemplated thereunder on
or before the Outside Date), and the Plan will also include customary provisions with respect to
waiver of conditions to the Effective Date). Five Miles intended investment, as reflected herein,
will be used to recapitalize the CompanyFixed/Floating Debtors, and more specifically, will be
used to retire the existing DIP facilities (as they relate to the Fixed/Floating Rate Debtors) and
provide funds for future property improvement work (PIP), furniture, fixtures, and equipment
investments (FF&E), cash reserves and potential growth opportunities. Five Mile will provide its
portion of the cash investment required to consummate the Transaction from our existing
investment vehicles or a Five Mile sponsored and controlled co-investment vehicles.
In addition, in connection with the Fixed Rate CMBS Mortgage Loan, (a) Five Mile Pooling will
enter into a new limited bad boy guaranty (the FM Guaranty) which shall cover the same bad
acts as the bad boy guaranty given by Grand Prix Holdings LLC in connection with the Fixed
Rate CMBS Mortgage Loan, except that Five Mile Pooling will not have any liability under the FM
Guaranty unless such bad act is actually, actively and affirmatively a direct and immediate cause of
and/or actually and affirmatively consented to by Five Mile or an affiliate that controls, is controlled
by or under common control with Five Mile and (b) the REIT or othernew holding company entity
which owns all the equity of the Innkeepers propertiesFixed/Floating Debtors (the Parent
4
Entity) shall enter into a new bad boy guaranty (the Parent Guaranty), which shall cover the
same bad acts as the bad boy guaranty given by Grand Prix Holdings LLC in connection with
the Fixed Rate CMBS Mortgage Loan, except that the beneficiary of the Parent Guaranty shall have
no right to enforce such Parent Guaranty unless the Five Mile member of the joint venture between
the Plan Sponsors as contemplated by the Lehman Commitment (the FM/Lehman JV) ceases to
have the right to vote at least 34% (which is a blocking right with regards to Super Majority
Decisions (as defined below)) of the equity interests in the FM/Lehman JV. Five Mile Poolings
maximum liability under the FM Guaranty shall not exceed 10% of the outstanding principal balance
of the restructured Fixed Rate CMBS Mortgage Loan from time to time for which such guaranty is
provided. There shall be no such cap on the liability of Parent Entity under the Parent Guaranty. If
Five Mile desires to sell or otherwise transfer (i) all of its interests in the FM/Lehman JV or (ii) a
portion of its interest in the FM/Lehman JV and with respect to any such partial sale or transfer,
Five Mile would cease to have the right to vote at least 34% (which is a blocking right with regards
to Super Majority Decisions) of the equity interests in the FM/Lehman JV following such sale or
transfer, then, in addition to any other conditions to such sale or transfer set forth in the Fixed Rate
CMBS Mortgage Loan documents, as a condition to any such sale or other transfer, an entity, which
has a minimum net worth of $135 million and which is otherwise acceptable to the holder of the
Fixed Rate CMBS Mortgage Loan in its sole but reasonable discretion shall deliver a guaranty in
form and substance substantially similar to the FM Guaranty which covers bad acts actually,
actively and affirmatively a direct and immediate cause of and/or actually and affirmatively
consented to by the transferee or an affiliate that controls, is controlled by or under common
control with such transferee and Five Mile or the transferee shall pay an appropriate review fee to be
set forth in the definitive documentation.
During the term of the Fixed Rate CMBS Mortgage Loan, (x) the corporate or other governance
documents of the FM/Lehman JV and the borrowers under the Fixed Rate CMBS Mortgage Loan
the operating lessees and such other subsidiaries of the FM/Lehman JV (as may be necessary to
effectuate the provisions of this paragraph) shall provide that super-majority voting (i.e., the consent
of at least 66 2/3 % of the equity interests in the FM/Lehman JV) shall be required for the decisions
identified on Appendix B to the Lehman Commitment if such decision would result in or otherwise
constitute a bad act under the FM Guaranty (irrespective and independent of whether or not such
bad act is actually, actively and affirmatively a direct and immediate cause of and/or actually and
affirmatively consented to by Five Mile or an affiliate that controls, is controlled by or is under
common control with Five Mile) and/or the Parent Guaranty, as applicable (collectively, the Super
Majority Decisions) and (y) such Super Majority Decisions may not be amended, waived or
modified without the consent of the holder of the Fixed Rate CMBS Mortgage Loan. Nothing
contained in this Second Amended Commitment Letter shall require the Special Servicer to take any
action in violation, derogation or contravention of the terms or provisions of the Fixed Rate CMBS
Mortgage Loan documents.
The Parties acknowledge that the applicable loan and credit documents evidencing and securing the
Fixed Rate CMBS Mortgage Loan shall be assumed, amended, restated, and/or supplemented as
Special Servicer and its counsel shall reasonably require as reasonably acceptable to the reorganized
borrowers and the Plan Sponsors in order to implement the proposed treatment of the Fixed Rate
CMBS Mortgage Loan, to incorporate the terms herein and to implement the Plan.
5
In connection with the foregoing, we hereby confirm that we have available, and will have available
at all times prior to consummation of the Transaction or the termination of the Second Amended
Commitment Letter, investor commitments that exceed, in the aggregate, $300 million.
III. Plan Subject to Higher and Better Offers; Five Mile Free to Pursue
Other Transactions
Subject to Court approval of the Bid Procedures (as hereinafter defined), Five Mile acknowledges
that the creditor treatment proposed herein will be subject to higher and better offers through an
auction. For avoidance of doubt, our providing this Second Amended Commitment Letter does
not preclude us in any way from discussing alternate transactions, including competing plans of
reorganization, or engaging in any discussions regarding providing financing or participating in any
such alternate transactions (each, an Alternate Transaction); provided however, that other than the
Lehman Commitment and the Amended Debtor Commitment (and the transactions contemplated
respectively thereby) we will not enter into a binding commitment with respect to, or otherwise
consummate, any Alternate Transaction prior to the occurrence of a Termination Event (as defined
in Section VIII hereof).
Special Servicer and Five Mile agree that until a Termination Event (as defined in Section VIII
hereof) occurs, Special Servicer and its affiliates and advisors shall be able to participate in
discussions regarding an Alternative Transaction; provided however, Special Servicer shall not enter
into a binding commitment with respect to, or otherwise consummate, any Alternative Transaction
prior to the occurrence of a Termination Event.
IV. Restructuring of Debt and Equity of the Company New Equity, Debt Forgiveness,
& Cash Pay Downs
A. Debt Restructurings
If the Plan Sponsors are the winning bidders at the auction, our Commitment for the Plan Sponsors
stalking horse bid contemplates a restructuring implemented through the Plan whereby the current
Fixed/Floating Debtors debt holders will realize value totaling $999.9 million889.9 million
(including the $3 million payment in connection with the Special Servicers release of Apollo
as described below) or 71% of their $1,408.31,242.1 million current outstanding obligations.
CreditorThe Fixed/Floating Debtors creditor treatment (excluding unsecured creditors) is being
implemented through $790.5622.5 million in new debt, $200.3348.2 million in equity and cash, $5.5
million of cash consideration for existing guarantees and servicing fees paid on behalf of the C6 and
C7 Trusts and $3.63.75 million ($375,000 of which shall come from Apollo) in cash to fund
certain creditor payments. The new debt also benefits from a capital structure supported by
approximately 30.635.9% in equity value.
An illustration and an explanation of the Plan Sponsors stalking horse bid and the resultant
Fixed/Floating Debtors creditor treatment under the Plan if the Plan Sponsors stalking horse bid
is the winning bid are detailed in Appendix A.
B. Cash Sources & Uses
Our Commitment contemplates that the cash investment of $174.1 million will be used as follows:
6
o Repayment of the Lehman and Five Mile DIP (as they relate to the
Fixed/Floating Debtors) in the amount of up to $70.564.1 million plus any
accrued fees or interest due on such facility;
o Payment to the holder of the Hilton Suites Orange/Anaheim Mezzanine loan in the
amount of $3.6 million in full satisfaction of its claim;
o Payment of $3 million to the Special Servicer in connection with the treatment of the
Fixed Rate CMBS Mortgage Loan;
o Payment of fees to the Special Servicer of the Fixed Rate CMBS Mortgage Loan
equal to $2.5 million as consideration for effecting the restructuring transactions on
behalf of the LBUBS 2006-C6 and LBUBS 2006-C7 trusts (the C6 and C7 Trusts);
o $67.374.9 million of cash to cover 2011 FF&E and future PIP work (currently
estimated at approximately $22.8 million and to be verified by the parties), funding
of additional cash on the post-Effective Date balance sheet, and closing and
emergence costs;
o Payment of $2.53.75 million ($375,000 of which shall come from Apollo) for the
various classes of unsecured creditors; and
o $26.2 million in cash as the Lehman Payment.
1
C. Our Stalking Horse Bid and Resultant Treatment of Claims and Interests
The Amended Debtor Commitment and the Plan Sponsors stalking horse bid is comprised of
the following treatment of claims and interests:
1. Fixed Rate CMBS Mortgage Loan: Reduction of the outstanding balance to $622.5
million.
a. Non-Recourse New Mortgage Loan of $622.5 million shall have the following
terms:
i. No change to the interest rate of 6.71%;
ii. No change to maturity date of July 9, 2017;
iii. During the first 48 months after the Effective Date, interest only will be
payable monthly and amortization will begin 48 months after the
Effective Date and will be based on a 30-year amortization schedule; and
iv. Prepayment shall be permitted at par without penalty and defeasance
requirements will be waived; and
b. Property release provision whereby the properties may be released at 108% of
the new allocated loan amount, so long as the debt service coverage ratio
thereunder, after giving effect to such release, is no worse than such ratio prior
to such release or if the foregoing is not consistent with the then applicable
REMIC rules and regulations such other provision that is acceptable to the
Company and you which is consistent with then applicable REMIC rules and
1
Subject to adjustment based on participation in the Third-Party Investment and Co-Investment Right. For
example, if Lehman were to own 40% of the New Equity (i.e., assuming 20% of the New Equity is sold pursuant to the
Third-Party Investment and 0% is sold pursuant to the Co-Investment Right), then the cash payment to Lehman would
be $61.0 million. Accordingly, in this example, the New Cash would increase by $34.8 million to a total of
$208.9.208.9 million.
7
regulations, the grantor trust rules and regulations and the pooling and servicing
agreement. Notwithstanding anything to the contrary, any property release
contemplated herein can only be effected in accordance with applicable REMIC
rules and regulations, the grantor trust rules and regulations and the pooling and
servicing agreement;
c. The Plan shall provide that the Special Servicer, on behalf of the C6 and C7
Trusts, shall (i) settle, release, and waive all of the Special Servicers claims against
Apollo Investment Corporation (Apollo), related in any way to that certain
Required Capital Improvements Guaranty executed by Apollo on June 29, 2007
(the Apollo Guaranty) and (ii) if an action remains pending in the State Courts
of New York or elsewhere, the Special Servicer shall dismiss its claims against
Apollo with prejudice. The effectiveness of such settlement, release, and waiver
is conditioned on the receipt by Special Servicer of indefeasible payment as
provided in the next sentence and shall be embodied in, and shall not be
effective unless and until, the Global Release (as defined herein) has been
embodied in an order entered in the Innkeepers Bankruptcy Court that has
become final and become non-appealable. Immediately after the Effective Date,
the Plan Sponsors will direct the reorganized CompanyNew HoldCo to make a
cash payment of $3 million to Special Servicer, on behalf of the C6 and C7
Trusts, as settlement of Special Servicers claims against Apollo with respect to
the Apollo Guaranty, which have been the subject of litigation pending in New
York Supreme Court. The settlement, release, and waiver shall be embodied in
the Global Release in the Plan and shall be in form and substance reasonably
satisfactory to Special Servicer and the form of release and waiver shall be in
form and substance reasonably satisfactory to Apollo and conditioned on the
above-described payment and the occurrence of the Effective Date;
d. Contemporaneously with the occurrence of the Effective Date, and as a
condition thereto, the Plan Sponsors will direct the reorganized CompanyNew
HoldCo to make a cash payment of a $2.5 million fee to the Special Servicer as
consideration for effecting the restructuring of the Fixed Rate Mortgage Loan on
behalf of the C6 and C7 Trusts contemplated herein. In addition, Special
Servicer shall continue to be entitled to collect any and all monthly or periodic
fees and other compensation payable to it under the pooling and servicing
agreement, including, without limitation, any monthly or periodic workout fee
payable in connection with the restructuring of the Fixed Rate Mortgage Loan
contemplated herein and same becoming a corrected mortgage loan except for
the portion of such workout fee that would be payable in connection with the
final principal payment of the Fixed Rate Mortgage Loan at the maturity date or
upon the earlier prepayment of same. For purposes of clarification, the
preceding sentence does not create any additional obligation or otherwise modify
the obligations, if any, of the Company orFixed/Floating Debtors, the
reorganized CompanyFixed/Floating Debtors or New HoldCo to pay any of
such fees or other compensation or any other amounts under the Fixed Rate
CMBS Mortgage loan documents, including the appropriate review fee to be set
forth in the definitive documentation as set forth in the second paragraph of
Section II herein; and
e. The lender under the Fixed Rate CMBS Mortgage Loan will receive the FM
Guaranty and the Parent Guaranty.
8
2. Floating Rate Mortgage Loan: Lehman, in full and final satisfaction of all of its claims
arising under or in connection with the Floating Rate Mortgage Loan will receive: (a)
50.0% of the New Equity and (b) $26.2 million in cash, subject, in each case, to
adjustment for the Co-Investment Right and the Third-Party Investment.
3. Anaheim Hilton Mortgage Loan (CWCapital as special servicer): Full payment through a
new non-recourse note on substantially the same terms as the existing note, except for
an extension of the maturity date to seven (7) years from the Effective Date of the Plan,
with no amortization during the loan term and prepayment shall be permitted at par
without penalty and defeasance requirements will be waived.
4. Anaheim Hilton Mezzanine Loan (Trimont as special servicer): A cash payment of $3.6
million as full satisfaction of the Anaheim Hilton Mezzanine Loan.
5. Hilton Ontario Mortgage Loan (C-III as special servicer): (i) Payment through a new
non-recourse note on substantially the same terms as the existing loan, except for
reduction of the outstanding balance to $8.0 million with the maturity date seven (7)
years from the Effective Date with no amortization during the loan term and
prepayment shall be permitted at par without penalty and defeasance requirements will
be waived; or (ii) such other treatment as set forth in the Plan that is acceptable in all
respects to the Company, the Plan Sponsors, and the Special Servicer, in each of their
respective reasonable discretion.
6. Residence Inn Mission Valley Mortgage Loan (LNR as special servicer): Full payment
through a new non-recourse note on substantially the same terms as the existing note,
except for an extension of the maturity date by one year, with no amortization during the
loan term and prepayment shall be permitted at par without penalty and defeasance
requirements will be waived.
7. Residence Inn Anaheim (Garden Grove) Mortgage Loan (LNR as special servicer): (i)
Payment through a new non-recourse note on substantially the same terms as the
existing note, except for reduction of the outstanding balance to $25.3 million with the
maturity date seven (7) years from the Effective Date with no amortization during the
loan term and prepayment shall be permitted at par without penalty and defeasance
requirements will be waived; or (ii) such other treatment as set forth in the Plan that is
acceptable in all respects to the Company, the Plan Sponsors, and the Special Servicer, in
each of their respective reasonable discretion.
8. Hilton Doubletree Washington D.C. Mortgage Loan (LNR as special servicer): Full
payment through a new non-recourse note on substantially the same terms as the
existing note, except for an extension of the maturity date by one year, with no
amortization during the loan term and prepayment shall be permitted at par without
penalty and defeasance requirements will be waived.
9. Residence Inn Tysons Corner Mortgage Loan (LNR as special servicer): Full payment
through a new non-recourse note on substantially the same terms as the existing note,
except for an extension of the maturity date by one year, with no amortization during the
9
loan term and prepayment shall be permitted at par without penalty and defeasance
requirements will be waived.
10. Hilton Homewood Suites San Antonio Mortgage Loan (LNR as special servicer): Full
payment through a new non-recourse note on substantially the same terms as the
existing note, except for an extension of the maturity date by one year, with no
amortization during the loan term and prepayment shall be permitted at par without
penalty and defeasance requirements will be waived.
3. 11. Additional Treatment for the Following Accepting Classes: Following the approval
of the disclosure statement by the Innkeepers Bankruptcy Court and the solicitation of
votes in a manner sufficient to comply with the requirements of sections 1125 and 1126
of the Bankruptcy Code, provided that the following classes of claims or interests vote[
to accept and otherwise ]support the Plan, they shall receive the following treatment:
a. Floating Rate Mezzanine Loan (TrimontTriMont as special servicer): SASCO
2008-C2, LLC, as 100% participant and owner of all economic and beneficial
interests in the mezzanine loan relating to the assets in the floating rate pool,
serviced by TriMont Real Estate Advisors, Inc. as special servicer, shall receive a
structured note or other debt or equity instrument or other consideration on
terms to be agreed upon between Lehman, Five Mile, and the Companythe Plan
Sponsors and the Fixed/Floating Debtors; provided that it votes[ to accept
and otherwise ]supports the Plan.
b. Unsecured Debt: A total of $2.5 million cash[ shall be available for distribution to],
collectively,Cash (of which Apollo Investment Corporation will fund
$375,000, subject to receipt of each of the releases described below) in the
amount of the lesser of $3.75 million and 65% of the face amount of the
general unsecured creditors of Innkeepersclaims against the Fixed/Floating
Debtors (excluding any deficiency claims) that are not otherwise paid pursuant
to a first day order; provided that the Company (the Unsecured Claims)[
shall be available for distribution to] the holders of Unsecured Claims (the
Unsecured Claims Fund); further, the Fixed/Floating Debtors shall
release and waive all preferences under section 547 of the Bankruptcy Code and
to the extent related thereto, section 550 of the Bankruptcy Code; provided,
however, that those classes that do not vote in favor of and otherwise support
the plan of reorganization will not received a distribution contemplated herein
and will not receive a waiver of preferences under section 547 of the Bankruptcy
Code or, to the extent related thereto, section 550 of the Bankruptcy Code.
c. Preferred Equity: The holders of Innkeepers USA Trusts 8.0% Series C
Cumulative Preferred Shares shall collectively receive: (i) a co-investment right,
subject to exemption from Section 5 of the Securities Act of 1933, limited to 2%
of the New Equity (as defined herein);[ provided, however, that ]such equity shall
have no minority rights, except to the extent required by section 1123(a)(6) of
the Bankruptcy Code (the Co-Investment Right), and (ii) $5.9 million of the
approximately $7.4 million currently escrowed in an account held by Innkeepers
10
USA Trust (the Baseline Preferred Cash Recovery). The balance of such
escrowed funds shall be available to, and shall be the property of, the reorganized
Company after the Effective Date.
4. 12. Existing Equity of the Company and Holdings: Except as expressly provided above,
holdersFixed/Floating Debtors and Issuance of New Equity: Holders of
common, preferred, and any other equity interests in Innkeepersthe Fixed/Floating
Debtors shall receive no distributions under the Plan on account of their interests.
Reorganized Innkeeperssuch interests. An entity that is newly formed by the Plan
Sponsors (New HoldCo) will acquire 100% of the indirect and direct equity of
reorganized Grand Prix Mezz Borrower Fixed, LLC, reorganized Grand Prix
Mezz Borrower Floating, LLC, reorganized Grand Prix Fixed Lessee, LLC, and
Grand Prix Floating Lessee, LLC, and such other assets as may be subsequently
identified as necessary to the operation of the Fixed/Floating Debtors[ provided,
however, that ]no assets of the Excluded Debtors
2
(defined below), including,
without limitation, cash or cash equivalents, shall be included in the transaction
contemplated by the Transaction. New HoldCo will issue equity (the New Equity)
as set forth below upon the Effective Date of the Plan, the occurrence of such
Effective Date conditioned on customary provisions, including the entry of an order
confirming the Plan that has been entered in the Innkeepers Bankruptcy Court and has
become final and non-appealable. The New Equity held by the winning bidders shall be
subject to dilution with respect to the Co-Investment Right (as described below).. The
ultimate corporate structure for the reorganized Fixed/Floating Debtors shall be
determined prior to the Effective Date of the Plan, by the Plan Sponsors in their
sole discretion (and consistent with this Second Amended Commitment Letter)
and will be described in a plan supplement document to be filed no later than ten
(10) days before the scheduled date for the confirmation hearing for the Plan.
5. 13. Application of Existing Cash on the Effective Date: Company, the Special Servicer
and/or LehmanThe Company shall seek to amend the final cash collateral orderFinal
Cash Collateral Order, with the support of Lehman and the Special Servicer, to
increase the amount of cash that may be held back as an expense reserve to $14.9
million in order to account for certain closing and emergence costs of the
Fixed/Floating Debtors, including potential success fees, in substantially the
form attached as Appendix C to the Amended Debtor Commitment. Special
Servicer and Five Mile agree that any cash in the Company (to include any cash
immediately on hand, any cash received on account of receivables existingat the
Company that is the property of the Fixed/Floating Debtors or as of the Effective
Date that is subject to application for disbursement, payment, repayment, or
distribution for the Fixed/Floating Debtors under the Final Cash Collateral
Order, whether or not applied prior to the Effective Date and revenues earned
therefrom) at the Effective Date, shall be applied to satisfy administrative claims
2
Excluded Debtors shall mean the Innkeepers debtors other than the Fixed/Floating Debtors. The
Excluded Debtors are excluded from the Transaction, and the Plan Sponsors will not be the stalking horse for
the Excluded Debtors or their assets. The Company may continue to market the assets of the Excluded
Debtors independently from the assets of the Fixed/Floating Debtors.
11
incurred but unpaid as of the Effective Date and to consummate the transaction
contemplated herein pursuant to the waterfall set forth in the Final Cash Collateral
Order (as shall be amended to increase the amount of cash held back as an expense
reserve, in order to account for certain closing and emergence costs, including potential
success fees). After the Effective Date, cash will be administered and applied pursuant
to the applicable cash management procedures under the applicable loan documents, and
the waterfall set forth in the Final Cash Collateral Order will no longer govern.
V. Offer Structure and Protections
As stated, theThe Company will solicit higher and better offers for 100% of the New Equity to be
issued pursuant to the Plan through an auction (the Auction) on the terms set forth belowherein.
We require that there be an Auction of the CompanyFixed/Floating Debtors on an enterprise
basis where the Plan Sponsors will be the stalking horse bidder at the Auction with initial stalking
horse bids to be as described herein and in the Amended Debtor Commitment and bid protections
set forth below. To that end, we require the Bankruptcy Courts entry of an order (the Bid
Procedures Order) approving bid procedures (the Bid Procedures) which include the following
terms:
Bids will be solicited for up to forty-five (45) calendar days following the approval of bidding
procedures;date of the entry of the Bid Procedures Order and the Auction shall
commence no later than 50 days following the date of the entry of the Bid Procedures
Order.
Bids, to be deemed a qualified bid and eligible to participate in the Auction, must be
accompanied by a cash deposit in the amount of $20 million in cash to an interest bearing
escrow account to be identified, established, and held by and in the name of the Company;
Bidders must be qualified on terms reasonably acceptable to the Company after consultation
with the Special Servicer and the Creditors Committee, which consultation shall include,
subject to confidentiality agreements reasonably acceptable to the Company and the Special
Servicer and the Creditors Committee, disclosure of the bidders, their qualifications, and their
bids;
All bids and overbids, to be deemed a qualified bid and eligible to participate in the Auction, and
whether made prior to or at the Auction, must be made on an enterprise-value basisenterprise
bids for all of and only the assets of the Floating Rate Debtors and the Fixed Rate
Debtors and either be (i) comprised entirely of cash or (ii) based on the debt and capital
structure and sources and uses of funds outlined herein and in Appendix A, on terms
substantially similar to those provided herein (including but not limited to the guarantees
provided to Special Servicer and the other terms, conditions, and treatment of claims as set forth
in this Amended Commitment Letterherein);
The Initialinitial Overbid of the implied enterprise value must be at least $15 million higher (in
cash and inclusive of the Stalking Horse Fee (as defined below)) than the implied enterprise
value of the Plan Sponsors Bid and based on the debt and capital structure and sources and uses
of funds outlined herein and in Appendix A (the Initial Minimum Overbid), and subsequent
12
bids must be in increments of at least $5 million and based on the debt and capital structure and
sources and uses of funds outlined herein and in Appendix A (each qualifying initial and
subsequent overbid, an Overbid);
23
[To be deemed a qualified bid and eligible to participate in the Auction, the equity consideration of such bid must
have a value of at least $363.2 million (comprised of the $348.2 million equity value as set forth herein and $15
million on account of the Initial Minimum Overbid) to be used for, among other things, the following on the
Effective Date: (a) $]53[ million in cash to satisfy claims on account of the Five Mile DIP; (b) $17.5 million in
cash to satisfy claims on account of the Solar DIP; (c) at least $22.8 million in cash to fund future property
improvement plan work and furniture, fixtures, and equipment reserves; (d) at least $10 million in cash to pay all
administrative and other claims and expenses not paid pursuant to the Final Cash Collateral Order (as
]amended[) [Docket No. 402] that are necessary for the ]Company[ to emerge from bankruptcy];
3
(e) at
least $39 million in cash for the reorganized Company[; (f) with respect only to qualified bids other than
the ]Debtor Commitment[, at least $200.3 million in cash to pay Lehmans claims against the ]Company[
(plus any applicable Overbid Allocation); and (g) to the extent the bid is submitted by a competing bidder, $10
million in cash to satisfy the $7.0 million Break-Up Fee and the up to $3.0 million Expense Reimbursement;]
The Bid Procedures and the Bid Procedures Order shall provide that to be deemed a qualified
bid, a bid that includes the Midland Financing shall not result in a bid employing a debt-to-
capitalization ratio for the reorganized enterprise that exceeds 70 percent;
4
The percentage increase in the implied enterprise value of the winning bidder will be allocated to
each collateral pool/individual property (the Overbid Allocation) by increasing the debt or
cash consideration that such collateral pool/individual property is receiving under the Plan in
proportion to the incremental Overbid amount (e.g., if a collateral pool is receiving a new
mortgage under the Plan in the face amount of $100, then a winning Overbid that is 4% greater
than the Plan Sponsors Bid would result in that collateral pool/individual property receiving a
mortgage in the face amount of $104; the same would apply to cash consideration); provided,
however, that the amount of the incremental Overbid consideration not allocated to collateral
pools/individual properties under the Overbid Allocation shall be allocated to each collateral
pool/individual property pro rata based on the respective percentage of consideration value
allocated to each of the respective collateral pools/individual properties against which such
respective collateral pool/individual property has a claim or from which it is entitled to payment
and such non-allocated amount shall flow through the Companys corporate and debt and equity
structure for purposes of payment satisfying prepetition claims and interests and determining the
ultimate recipients of such Overbid; provided, further, however, that to the extent any winning
Overbid includes debt consideration to the Special Servicer in excess of the amounts provided in
2
Note that the additional consideration included in any Overbid (except for the Initial Overbid) must consist of
no more than 70% debt consideration
3
Note that the Midland Financing shall be no more than
$622.5 million plus 70% of the Overbid amount (minus $15 million).
3
For the avoidance of doubt, to the extent the Debtors incur administrative expense claims in excess of the $10
million estimate, the Successful Bidder (as defined below) shall be required to fund such amounts.
4
Midland Financing shall mean the debt financing provided for herein (together with all of the terms and
conditions described herein regarding the treatment of Special Servicers claim including the guarantees described
herein).
13
Appendix A, such additional debt shall be valued based on a net present value analysis using an
8% discount rate (the mechanics of such valuation to be agreed upon between the Plan
Sponsors, Special Servicer, and the Company);
In the event the winning bidder is not the Plan Sponsors (which includes any wholly-owned
subsidiary of Five Mile), the Floating Rate Mortgage Loan shall be repaid in cash in an amount
determined in accordance with the Overbid Allocation (assuming an allocation of $200.3 million
of value to the Floating Rate Mortgage Loan in the Plan Sponsors Bid);
In the event that the application of the Overbid Allocation would cause any prepetition holders
recovery to exceed such holders allowed claim, then such amount will be capped by the amount
of the allowed claim and any excess Overbid Allocation will be allocated through and in
accordance with the Companys corporate and debt and equity structure for purposes of
determining the ultimate recipients of such overbidOverbid value;
The determination of the winning bidder at the Auction shall be made by the Company only
after consulting with the Special Servicer relating to the Bids made at the Auction;
[To be deemed a qualified bid and eligible to participate in the Auction, the equity consideration of such bid must
have a value of at least $363.2 million (comprised of the $348.2 million equity value as set forth herein and $15
million on account of the Initial Minimum Overbid) to be used for, among other things, the following on the
Effective Date: (a) $]46.6[ million in cash to satisfy claims on account of the Five Mile DIP; (b) $17.5 million
in cash to satisfy claims on account of the Solar DIP; (c) at least $22.8 million in cash to fund future property
improvement plan work and furniture, fixtures, and equipment reserves; (d) at least $10 million in cash to pay all
administrative and other claims and expenses not paid pursuant to the Final Cash Collateral Order (as ]to be
amended as set forth below[) [Docket No. 402] that are necessary for the ]Fixed/Floating
Debtors[ to emerge from bankruptcy];4 (e) at least $41.6 million in cash for New HoldCo[; (f)
with respect only to qualified bids other than the ]Amended Debtor Commitment and this Second
Amended Commitment Letter[, at least $200.3 million in cash to pay Lehmans claims against the
]Fixed/Floating Debtors[ (plus any applicable Overbid Allocation); and (g) to the extent the bid is
submitted by a competing bidder, $10 million in cash to satisfy the $7.0 million Break-Up Fee and the up to
$3.0 million Expense Reimbursement;] and
A bid submitted by or through a holder of a secured claim against the Company shall not be
deemed a qualified bid and eligible to participate in the Auction if the bid contemplates the
ability of secured creditors to credit bid their claims against the Company within the meaning of
sections 363(k) or 1129(b)(2)(A)(ii) of the Bankruptcy Code; provided that all rights with respect
to a creditors ability to credit bid under both applicable nonbankruptcynon-bankruptcy and
bankruptcy law are expressly reserved to the extent the Auction is not consummated orthat (i)
the auction process contemplated in the Bid Procedures is terminated or abandoned, (ii)
the Special Servicer is no longer obligated to support this Term Sheet or the New
Party/Midland Commitment (as defined in, and attached as Exhibit C to, the Bid
Procedures Motion), (iii) Lehman terminates the Amended Debtor Commitment, (iv)
4 For the avoidance of doubt, to the extent the Fixed/Floating Debtors incur administrative expense
claims in excess of the $10 million estimate, the Successful Bidder (as defined below) shall be required to fund
such amounts.
14
the Plan is not confirmed and does not become effective, or (v) the Effective Date shall not
have occurred by September 1,15, 2011.
The Bid Procedures Order will provide that, to the extent the Amended Debtor Commitment has
not terminated as a result of a Plan Sponsor Breach (as defined in the Amended Debtor
Commitment), in the event of (i) an Overbid in which Plan Sponsors Bid is not the winning bid (the
"an Overbid Transaction") or (ii) the Companys execution of an agreement to pursue an
alternative transaction for a material portionany of the Companys assets of the Fixed/Floating
Debtors after entry of the Bid Procedures Order (the "Alternative Transaction"), the Plan
Sponsors will receive a breakup fee in the amount of $7 million (the Break-Up Fee) plus
reimbursement of all of Five Miles reasonable and documented fees and expenses, not to exceed $3
million (the Expense Reimbursement and together with the Break-Up Fee, the Stalking Horse
Fee). Twenty-five percent (25%) of the Break-Up Fee may be allocated to Lehman as
consideration for Lehmans agreement to fund a portion of the capital necessary for the
CompanyFixed/Floating Debtors to emerge from bankruptcy, as has been mutually agreed
between Lehman and Five Mile, with the remainder allocated to Five Mile. Other than terminating
their obligations in accordance with the this Second Amended Commitment Letter and the
Amended Debtor Commitment, the Plan Sponsors sole remedy at law and in equity against the
Company in the event of an Overbid Transaction or Alternative Transaction shall be receipt of the
Break-Up Fee and Expense Reimbursement as liquidated damages, provided, however, that (i)
nothing hereinin the Amended Debtor Commitment shall limit any rights and remedies at law or
in equity that the Plan Sponsors have or may have as creditors of the Company and (ii) if there is a
material breach by the Company of the Amended Debtor Commitment or the Term Sheet that
results in a termination of the Amended Debtor Commitment Letter, and provided the Plan
Sponsors are not entitled to the Stalking Horse Fee, the Plan SponsorsSponsors damages for such
material breach shall be capped at $10 million.
The Stalking Horse Fee, if any, shall be payable by the CompanyFixed/Floating Debtors upon the
earlier of (i) the Effective Date and (ii) consummation of an Alternative Transaction.
The Company (a) will file a motion to approve the Bid Procedures and the Stalking Horse Fee (the
Bid Procedures Motion) and request a hearing for approval thereof as soon as is practicable, and
(b) will file the Plan, a disclosure statement for the Plan (Disclosure Statement), and request a
hearing for approval of the Disclosure Statement and seek confirmation of the Plan.
Each of the foregoing and subsequent pleadings (including the order approving the Bid Procedures
Motion (the Bid Procedures Order)) shall be acceptable in all respects to the Plan Sponsors and
the Special Servicer in each of their respective reasonable discretion. The Plan will be filed jointly
for all the Debtors.
Special Servicer confirms that, other than the sale of equity interests in the reorganized
CompanyNew HoldCo, the Plan will not contemplate or provide for a sale of the Company or any
of its assets pursuant to section 1129(b)(2)(a)(ii) or (iii) or section 363 of the Bankruptcy Code.
5
As
5
The Parties acknowledge that all rights with respect to a creditor's ability to credit bid under both applicable
nonbankruptcy and bankruptcy law are expressly reserved to the extent that (a) the auction process contemplated in the
Bid Procedures is terminated or abandoned, (b) Special Servicer is no longer obligated to support the Term Sheet
attached to the Amended Debtor Commitment or the Amended and Restated Agreement Relating to Midland
15
such, no holder of a lien on any asset of the Company shall be permitted to credit bid its claim as
part of the Plan.
If the Company seeks an order requesting authority from the Innkeepers Bankruptcy Court to
reimburse the reasonable and documented expenses of Bidder D, incurred prior to December 15,
2010, in an amount not greater than $500,000, provided that the Break-Up Fee and Expense
Reimbursement have been approved by the Innkeepers Bankruptcy Court, Five Mile and Special
Servicer confirm that they shall not object to such request and to the payment of such expenses
shall be paid by the Company at the conclusion of the Auction, so long as Bidder D is not the
successful winning bidder at the Auction.
VI. Strength of the Stalking Horse Bid and the Proposed Plan
We believe the Transaction and the Plan (consistent with the terms of this Second Amended
Commitment Letter and the Amended Debtor Commitment Letter) is beneficial to all creditors and
is in the best interests of the Company and its bankruptcy estates. The Plan values the
CompanyFixed/Floating Debtors at $1,138.7970.7 million and the current debt is reduced
through debt forgiveness, pay down and equity conversion post-confirmation to approximately
$790.5622.5 million. Further, there is high certainty and low execution risk with the Plan, financed
by our Commitment, as it will provide for the exit financing component critical to the success and
emergence of Innkeepers from bankruptcy. There is no due diligence condition.
We believe the Plan also provides additional stability for the CompanyFixed/Floating Debtors by
providing adequate cash to pay exit costs, fund $7.8 million of FF&E reserve contribution for the
first year of the restructured Fixed Rate CMBS Mortgage Loan (which funds shall be held by the
Master Servicer of the Fixed Rate CMBS Mortgage Loan), and provide general cash liquidity to be
held at the CompanyNew HoldCo (includes amounts for future PIPs) to manage seasonality within
the business, cover operating or interest shortfalls should they occur, and provide funds to pay
administrative and priority expenses upon emergence.
Further, the Plan shall include a mutual full discharge, release and exculpation of liability, and
injunction (the Global Release), to the maximum extent of applicable law, other than a release of
the obligations undertaken herein and in the Plan and other Transaction documents, by and among
(each against one another) the CompanyFixed/Floating Debtors, the Plan Sponsors, Special
Servicer, (including the master servicer for the Fixed Rate Mortgage Loan, the C6 and the C7 Trusts
and trustees), Apollo, and other holders of claims against and interests in the
CompanyFixed/Floating Debtors, each of their respective predecessors, successors and assigns,
shareholders, affiliates, subsidiaries, principals, employees, agents, officers, and directors, trustees,
members, master servicers, special servicers, trusts and trustees, and professionals (including the
officers, directors, members and trustees of the Parent Companies,
6
in their capacities as
Commitment to Support Amended Debtor Commitment with New Party under Certain Circumstances dated as of
January 14,March 9, 2011 by and among Grand Prix Holdings, LLC, Innkeepers USA Trust and Special Servicer, (c)
Lehman terminates the Amended Debtor Commitment, (d) the plan of reorganization that encompasses the provisions
provided for herein or the winning Bid through the auction process described in (a) is not confirmed, or (e) Effective
Date shall not have occurred by September 15, 2011.
6
Parent Companies shall mean Grand Prix Holdings LLC, Innkeepers USA Trust, Innkeepers Financial
Corporation, and Innkeepers USA Limited Partnership.
16
such) from the following: (i) any and all claims and causes of action relating to the
CompanyFixed/Floating Debtors arising prior to the Effective Date, and in connection therewith,
shall confirm and adjudicate the validity, enforceability and perfection, in all respects, of the liens,
claims, interests, mortgages and encumbrances of the Fixed Rate Mortgage Loan, the C6 and the C7
Trusts; and (ii) any and all claims arising from the actions taken or not taken in good faith in
connection with the Transaction and the Chapter 11 cases; provided, however, Island Hospitality
Management, Inc. shall not be entitled to a release unless it reasonably cooperates with Plan
Sponsors, the reorganized CompanyNew HoldCo, and the new manager. It is expressly
understood and agreed, that notwithstanding anything otherwise contained herein or in the
Amended Debtor Commitment, the (i) releases of Apollo and the stipulation of discontinuance of
the Apollo Guaranty litigation and (ii) the waivers and releases to be given by Apollo that are
described herein shall not be effective until the Special Servicer has received the $3 million cash
payment provided for herein and the occurrence of the Effective Date, which shall include that the
Global Release has been embodied in the order confirming the Plan as entered in the Innkeepers
Bankruptcy Court that has become final and become non-appealable.
We are ready to move forward and have all the resources, including available funds, to conclude the
transactions outlined in this Second Amended Commitment Letter and the Amended Debtor
Commitment.
VII. Special Servicer Covenants
The Company, Lehman, Five Mile Pooling and the Special Servicer have entered into the Amended
Debtor Commitment whereby the Company has agreed to file the Bid Procedures and prosecute the
Plan described herein. The Special Servicer by virtue of its execution of the Amended Debtor
Commitment intends to proceed and perform its undertakings contained therein. With such
understanding, Special Servicer hereby covenants and agrees to the following:
1) For as long as no Termination Event has occurred under the Amended Debtor
Commitment, and no Termination Event has occurred hereunder, the Special Servicer
willhereby covenants to support the provisions of the Term Sheet (the Term Sheet)
as provided for therein, which is included in the Amended Debtor Commitment
(including the Plan, Transaction, Auction, and the Bid Procedures Order, each as set
forth in the Term Sheet); .
2) In the event a Termination Event has occurred under the Debtor Commitment, and
unless such Termination Event thereunder constitutes a Termination Event hereunder
or in the December 10 Commitment Letter (as amended), Special Servicer shall proceed
with the undertakings and commitments as provided under and upon the terms of the
December 10 Commitment Letter (as amended).
3) Neither paragraph 1) or 2) above, nor anything else contained herein, shall prevent or
otherwise restrict Special Servicer from exercising it rights to terminate this Amended
Commitment Letter if there exists a Termination Event under Section VIII herein or the
December 10 Commitment Letter (as amended) if there exists a Termination Event
under the December 10 Commitment Letter (as amended).
VIII. Termination of Commitment
This Second Amended Commitment Letter outlines only some of the essential terms regarding the
proposed Transaction, is not all-inclusive and does not purport to summarize or contain all of the
17
conditions, covenants, representations, warranties and other provisions which would be contained in
definitive documentation for the Transaction.
This Second Amended Commitment Letter shall terminate and be of no further force or effect, and
we and you shall no longer be obligated with respect to this Commitment and other agreements set
forth herein (including, without limitation, our agreement with respect to Alternate Transactions set
forth in Section III hereof), upon the earliest to occur of the following (each, a Termination
Event) and notice from the party with the right to terminate as set forth below:
1. the failure to occur on or before the stated deadline of any of the following with respect to
the Plan (the Target Dates):
a. the Bid Procedures (including the Break-up Fee and the Expense Reimbursement)
have not been approved by the Innkeepers Bankruptcy Court as of March 31, 2011;
b. the Plan has not been confirmed by the Innkeepers Bankruptcy Court pursuant to an
order of the Innkeepers Bankruptcy Court by June 30, 2011; provided, however,
that this Termination Event shall not apply to the Chapter 11 case of Grand
Prix West Palm Beach LLC;
c. the Plan and Disclosure Statement have not been filed by April 9, 2011; and
d. c. the Effective Date has not occurred and/or all of the transactions contemplated
under the Plan and this Second Amended Commitment Letter have not been closed
and consummated as contemplated thereunder, all on or before September 14, 2011
(the Outside Date); provided further, unless otherwise agreed by each of the
Fixed/Floating Debtors, the Plan Sponsors, and the Special Servicer in writing,
that upon the occurrence of this Termination Event, the Second Amended
Commitment Letter shall automatically terminate and be of no further force or effect
and the order confirming the Plan will provide that both confirmation and the
confirmation order will be automatically revoked (with a reversion to the status quo
ante) on September 15, 2011;
2. the occurrence of any condition, change or development that could reasonably be expected
to have a material adverse effect on the business, assets, liabilities (actual or contingent),
operations, condition (financial or otherwise) or prospects of the CompanyFixed/Floating
Debtors taken as a whole with such Termination Event exercisable only by Five Mile; provided,
however, that this Termination Event shall not apply to the Chapter 11 casescase of Grand
Prix West Palm Beach LLC, KPA HI Ontario, LLC and KPA RIGG, LLC;
3. failure to execute, deliver or obtain all related documents (including customary
representations, warranties, covenants, conditions, opinions, including an opinion by Special
Servicers REMIC counsel with respect to the structure of the contemplated transaction,
corporate and other governance documents and indemnities) and rating agency confirmations
necessary to effectuate i) the Transaction with respect to the Fixed Rate CMBS Mortgage Loan
or otherwise affecting the treatment, including the economics thereof, in each case in form and
substance satisfactory to Special Servicer and Five Mile in our reasonable discretions and ii) the
Transaction in each case in form and substance satisfactory to Five Mile in each of our
reasonable discretion; provided, however, that this Termination Event shall not apply to the
Chapter 11 casescase of Grand Prix West Palm Beach LLC, KPA HI Ontario, LLC and KPA
RIGG, LLC;
18
4. any material breach by Special Servicer or Five Mile of, or material, non-compliance with,
the agreements set forth in this Second Amended Commitment Letter;
5. mutual agreement of Special Servicer and Five Mile to terminate this Second Amended
Commitment Letter;
6. termination (other than by expiration of the term in the normal course) or rejection of any
franchise agreement deemed necessary by the Plan Sponsors or Special Servicer prior to the
Effective Date without the Plan Sponsors and Special Servicers written approval with respect
to the assets of the Fixed/Floating Debtors; provided, however, this shall not be a
termination event if the Plan Sponsors elect to pursue the transaction contemplated herein with
no modifications to the treatment, including the economics thereof, of the Fixed Rate CMBS
Mortgage Loan; provided, further, however, that this Termination Event shall not apply to the
Chapter 11 casescase of Grand Prix West Palm Beach LLC, KPA HI Ontario, LLC and KPA
RIGG, LLC;
7. failure by Company to assume and, if necessary, assign all franchise agreements pursuant to
an order of the Court satisfactory to the Plan Sponsors or the Special Servicer in all material
respects on or before the Effective Date with respect to the assets of the Fixed/Floating
Debtors; provided, however, this shall not be a termination event if the Plan Sponsors elect to
pursue the transaction contemplated herein with no modifications to the treatment, including
the economics thereof, of the Fixed Rate CMBS Mortgage Loan; provided, further, however,
that this Termination Event shall not apply to the Chapter 11 casescase of Grand Prix West
Palm Beach LLC, KPA HI Ontario, LLC and KPA RIGG, LLC;
8. immediately on or prior to the hearing on the Bidding Procedures (as defined in the
Amended Debtor Commitment), failure by the Plan Sponsors to identify a list of property
managers reasonably acceptable to Special Servicer and Five Mile in all material respects for the
management of the hotels;
9. prior to the Effective Date, the change of any of the Super Majority Decisions and/or voting
requirements for Super Majority Decisions as established in the Lehman Commitment;
10. the occurrence of any termination event under the Lehman Commitment.;
11. the occurrence of any termination event under the Amended Debtor Commitment.
Time is of the essence with respect to the Termination Events.
IX. Miscellaneous
All notices, requests, claims, demands and other communications hereunder shall be given (and shall
be deemed to have been duly received if given) by hand delivery in writing or by facsimile
transmission with confirmation of receipt, as follows:
if to Five Mile:
19
Three Stamford Plaza
301 Tresser Boulevard, Ninth Floor
Stamford, CT 06901
Attention: James G. Glasgow, Jr.
Email: jglasgow@fivemilecapital.com
Facsimile: (203) 905-0954
With a copy to:
Kasowitz, Benson, Torres & Friedman LLP
1633 Broadway
New York, New York 10019
Attention: Adam L. Shiff
Email: ashiff@kasowitz.com
Facsimile: (212) 506-1000
if to Special Servicer:
Midland Loan Services, a division of PNC Bank, National
Association
10851 Mastin, 6th Floor
Overland Park, KS 66210
Attention: Kevin S. Semon
Email: kevin.semon@midlandls.com
Facsimile: (913) 253-9723
With a copy to:
Haynes and Boone, LLP
1221 Avenue of the Americas30 Rockefeller Plaza, 26
th
Floor
New York, New York 10019
10112
Attention: Lenard M. Parkins and Lawrence Mittman
Email: lenard.parkins@haynesboone.com
lawrence.mittman@haynesboone.com
Facsimile: (212) 884-8226
(212) 884-8219
This Second Amended Commitment Letter, the rights of the parties, and all actions arising in whole
or part under or in connection herewith will be governed by and construed in accordance with the
laws of the State of New York.
This Second Amended Commitment Letter constitutes the entire agreement between the parties
and supersedes any and all prior discussions, negotiations, proposals, undertakings, understandings
and agreements, whether written or oral, between you (or the Company), on the one hand, and us,
on the other hand. No material modification or waiver of any provision hereof shall be enforceable
20
unless approved by you and us in writing. Neither you, on the one hand, nor us, on the other hand,
is relying upon any statement or representation made by or on behalf of the other, except as
expressly provided in thethis Second Amended Commitment Letter. This Amended Commitment
Letter shall not be assignable by any party hereto without the prior written consent of the other
party hereto (and any attempted assignment without such consent shall be null and void ab initio).
We are prepared to enter into a transaction on the terms set forth herein. Upon receipt of a fully
executed counterpart to this Second Amended Commitment Letter, both parties agree to negotiate
in good faith regarding the implementation of the Transaction contemplated in this Second
Amended Commitment Letter, including engaging in the preparation and negotiation of definitive
documents, and Special Servicer agrees to move forward with its undertakings described in Section
VII herein.
Remainder of Page Intentionally Blank
Signature Pages to Follow
NOT A SOLICITATION OF VOTES ON A PLAN
Subject to FRE 408
Subject to Joint Interest Agreement
Should you have any questions regarding this Amended Commitment Letter, please do not hesitate
to contact James Glasgow (jglasgow@fmcp.com) or Al Nickerson (anickerson@fmcp.com) at (203)
905-0950.
Sincerely yours,
Five Mile Capital II Pooling REIT LLC,
By: Five Mile Capital Partners LLC,
its manager
By: _______________________________
Scott Leitman
Managing Director
Acknowledged and Agreed:
Midland Loan Services, a division of PNC Bank, National Association,
as Special Servicer for U.S. Bank, National Association as Trustee for the Registered
Holders of LB-UBS Commercial Mortgage Trust 2007-C6, Commercial Mortgage Pass-Through
Certificates successor trustee to Bank of America National Association
By:
Name:
Title:
EXHIBIT A
FIXED/FLOATING DEBTORS
The Floating Rate Debtors are Grand Prix Atlantic City LLC; Grand Prix Montvale LLC; Grand Prix Ft.
Wayne LLC; Grand Prix Grand Rapids LLC; Grand Prix Harrisburg LLC; Grand Prix Ontario LLC; Grand
Prix Troy (Central) LLC; Grand Prix Troy (SE) LLC; KPA/GP Valencia LLC; Grand Prix Albany LLC; Grand
Prix Woburn LLC; KPA/GP Louisville (HI) LLC; KPA/GP Ft. Walton LLC; Grand Prix Rockville LLC; Grand
Prix Morristown LLC; Grand Prix Addison (SS) LLC; Grand Prix Bulfinch LLC; Grand Prix East Lansing LLC;
Grand Prix Indianapolis LLC, and Grand Prix West Palm Beach, LLC.
The Fixed Rate Debtors are Grand Prix Ft. Lauderdale LLC; Grand Prix Addison (RI) LLC; Grand Prix
Altamonte LLC; Grand Prix Arlington LLC; Grand Prix Atlanta (Peachtree Corners) LLC; Grand Prix
Atlanta LLC; Grand Prix Bellevue LLC; Grand Prix Binghamton LLC; Grand Prix Bothell LLC; Grand Prix
Campbell / San Jose LLC; Grand Prix Cherry Hill LLC; Grand Prix Chicago LLC; Grand Prix Denver LLC;
Grand Prix Englewood / Denver South LLC; Grand Prix Fremont LLC; Grand Prix Gaithersburg LLC;
Grand Prix Lexington LLC; Grand Prix Livonia LLC; Grand Prix Louisville (RI) LLC; Grand Prix Lynnwood
LLC; Grand Prix Mountain View LLC; Grand Prix Portland LLC; Grand Prix Richmond LLC; Grand Prix
Richmond (Northwest) LLC; Grand Prix Saddle River LLC; Grand Prix San Jose LLC; Grand Prix San
Mateo LLC; Grand Prix Shelton LLC; Grand Prix Sili I LLC; Grand Prix Sili II LLC; Grand Prix Tukwila LLC;
Grand Prix Windsor LLC; Grand Prix Horsham LLC; Grand Prix Columbia LLC; Grand Prix Germantown
LLC; Grand Prix Islandia LLC; Grand Prix Lombard LLC; Grand Prix Naples LLC; Grand Prix Schaumburg
LLC; Grand Prix Westchester LLC; Grand Prix Willow Grove LLC; Grand Prix Belmont LLC; Grand Prix El
Segundo LLC; Grand Prix Las Colinas LLC; and Grand Prix Mt. Laurel LLC.
The Other Plan Debtors are Grand Prix Floating Lessee LLC; Grand Prix Fixed Lessee LLC; Grand Prix
Mezz Borrower Floating, LLC; Grand Prix Mezz Borrower Floating 2, LLC; and Grand Prix Mezz
Borrower Fixed, LLC.
The Fixed/Floating Debtors are the Floating Rate Debtors, the Fixed Rate Debtors, and the Other
Plan Debtors. The Fixed/Floating Debtors own and/or operate the assets that serve as collateral for
the Floating Rate Mortgage Loan and the Fixed Rate Mortgage Loan.
APPENDIX A APPENDIX A
67
PRO FORMA CAPITALIZATION
($ in millions)
Current Debt Adjusted Pay Down/ Pro Forma
Principal Balance
(a)
Impairment Balance Conversion Principal Balance
DEBT
Five Mile Fixed Pool DIP Loan $46.6 $0.0 $46.6 ($46.6) $0.0
Lehman DIP Loan
(b)
17.5 0.0 17.5 (17.5) 0.0
Fixed Pool Mortgage
(c)
825.4 (202.9) 622.5 0.0 622.5
Floating Pool Loan
Mortgage 220.2 (19.9) 200.3 (200.3) 0.0
Mezzanine (PIK interest) 132.4 (132.4) 0.0 0.0 0.0
Total 352.6 (152.3) 200.3 (200.3) 0.0
Total Debt $1,242.1 ($355.2) $886.9 ($264.4) $622.5
Implied Equity $0.0 $348.2
Total Capitalization $1,242.1 $970.7
Note: All numbers are rounded to a single decimal place.
(a) Current Principal Balance represents principal balance as of the date the Company filed for Chapter 11 and does not include any accrued or
unpaid interest, default interest, or other fees and charges.
(b) Assumes DIP financing facility is fully drawn.
(c) A new, non-recourse note having the following terms: (i) the same maturity (July 9, 2017) and interest rate (6.71%) as under the existing
loan; (ii) interest-only during the first 48 months after the Effective Date, amortization will begin 48 months after the Effective Date and
will be based on a 30-year amortization schedule; (iii) prepayment permitted at par without penalty, defeasance requirements will be waived.
(d) A new non-recourse note on substantially the same terms as the existing note, except for an extension of the maturity date to seven (7)
years from the Effective Date and with no amortization during the loan term, prepayment permitted at par without penalty, defeasance
requirements will be waived.
(e) A new non-recourse note on substantially the same terms as the existing note, except for an extension of the maturity date by one year and
with no amortization during the loan term, prepayment permitted at par without penalty, defeasance requirements will be waived.
(f) The Company currently has $7.4 million escrowed in an account held by Innkeepers USA Trust. This escrow will be used to make a $5.9
million payment to the holders of Innkeepers USA Trusts 8% Series C Cumulative Preferred Shares and the remaining $1.5 million
balance shall be available to the reorganized Company after the Effective Date. This $7.4 million is not included in the Pro Forma Implied
Equity and the holders of Innkeepers USA Trusts 8% Series C Cumulative Preferred Shares shall not receive any portion of the Overbid
Allocation on account of their receipt of the $5.9 million payment from the $7.4 million escrowed funds.
67
Appendix A (and all of the statements contained herein) is proffered in the nature of a settlement
proposal in furtherance of settlement discussions, and is intended to be entitled to the protection of Rule 408 of
the Federal Rules of Evidence and any other applicable statutes or doctrines protecting the use or disclosure of
confidential information and information exchanged in the context of settlement discussions, and shall not be
treated as an admission regarding the truth, accuracy or completeness of any fact or the applicability or strength of
any legal theory.
ILLUSTRATIVE SOURCES AND USES SCHEDULE
($ in millions)
Sources Uses
New Cash
(a)
$174.1 Lehman Mortgage Payment
(a)
$26.2
Apollo Contribution 0.4 Repayment of Solar DIP Financing 17.5
Repayment of Five Mile DIP Financing 46.6
Unsecured Creditors Payment 3.8
Apollo Guaranty Settlement 3.0
Special Servicer Cash Payment 2.5
Balance Sheet Cash
(b)
74.9
Total $174.5 $174.5
Note: All numbers are rounded to a single decimal place.
(a) Subject to adjustment based on participation in the Third-Party Investment and the Co-Investment Right. For example, if Lehman were to
own 40% of the New Equity (i.e., assuming 20% of the New Equity is sold pursuant to the Third-Party Investment and 0% is sold
pursuant to the Co-Investment Right), then the cash payment to Lehman would be $61.0 million. Accordingly, in this example, the New
Cash would increase by $34.8 million to a total of $208.9 million.
(b) Balance sheet cash to be used for, among other purposes, the funding of $22.8 million of FF&E, PIP, and working capital reserves, the
potential $500,000 payment to Bidder D and closing costs. (currently estimated to be approximately $10 million). Insofar as any of
these costs are not realized in their full amounts, the balance sheet cash shall stay with the New Holdco.
K&E 18532826
EXHIBIT G1
Amended New Party / Midland Commitment
As of March 9, 2011
INNKEEPERS USA TRUST
340 Royal Poinciana Way, Suite 306
Palm Beach, Florida 33480
Midland Loan Services, a division of PNC Bank, National Association
10851 Mastin, 6th Floor, Overland Park, KS 66210
Attention: Kevin S. Semon
Vice President, Special Servicing Manager
Re: Amended and Restated Agreement Relating to Midland Commitment to
Support Amended Debtor Commitment with New Party under Certain
Circumstances
If (i) one or more Termination Events (as defined in the Amended Five
Mile/Midland Commitment (as defined herein)) occur under the Second Amended and Restated
Binding Commitment Regarding the Acquisition and Restructuring of Certain Subsidiaries of
Innkeepers USA Trust entered into by Five Mile Capital II Pooling REIT LLC ("Five Mile") and
Midland Loan Services, a division of PNC Bank, National Association (as Special Servicer for
Bank of America N.A., as Trustee for the Registered Holders ofLB-UBS Commercial Mortgage
Trust 2007 - C6, Commercial Mortgage Pass-Through Certificates, Series 2007 - C6) (the
"Special Servicer"), dated March 9, 2011 (the "Amended Five Mile/Midland Commitment")
as a result of one or more breaches by Five Mile thereunder, and Special Servicer terminates the
Amended Five Mile/Midland Commitment, (ii) on or before the date of the Auction (as defined
in the Term Sheet attached as Exhibit A to the Amended Debtor Commitment (as defined
herein)), Innkeepers USA Trust (together with its wholly owned direct and indirect subsidiaries,
the "Company") proposes a third party acceptable to the Special Servicer in its sole but
reasonable discretion ("New Party") to consummate the Transaction (as defined in the Amended
Five Mile/Midland Commitment) on the same or better terms as contained in the Amended Five
Mile/Midland Commitment, including but not limited to, the limited guaranty of each of Five
Mile and Parent Entity (as is defined in the Amended Five Mile/Midland Commitment), and (iii)
New Party and Lehman ALI Inc. ("Lehman") have entered into a written commitment on the
same or better terms as that contained in that certain amended and restated commitment
agreement entered into by Five Mile and Lehman, dated March 9, 2011 (the "Amended Five
Mile/Lehman Commitment") which are expressly supported by Lehman, then, provided that
(x) no other Termination Event has occurred (i.e. other than as a result of a breach or breaches by
Five Mile), (y) New Party executes and delivers a commitment to the Special Servicer in the
same form and substance as the Amended Five Mile/Midland Commitment (containing the
guarantees, as referenced above) with such changes that are required to reflect that New Party is
replacing Five Mile and any changes to the Transaction that are acceptable to Special Servicer in
its sole but reasonable discretion (the "New Party/Special Servicer Commitment"), and (z) the
K&E 18532830
Company, Apollo Investment Corporation ("Apollo"), New Party, and Lehman confirm in a
writing acceptable to the Special Servicer that they affirmatively and expressly support and are
willing to proceed with the transaction as contemplated in the New Party/Special Servicer
Commitment and any corresponding modification to the Amended and Restated Binding
Commitment Agreement regarding the Acquisition and Restructuring of Certain Subsidiaries of
Innkeepers USA Trust entered into by the Company, Five Mile, Lehman, the Special Servicer,
and Apollo, dated March 9, 2011 (the "Amended Debtor Commitment"), the Special Servicer
shall support the Amended Debtor Commitment and any corresponding modification to the
Amended Debtor Commitment so long as no termination event occurs thereunder or under the
New Party/Special Servicer Commitment. The determination of whether terms are "the same or
better" as described herein shall be made by Special Servicer in its sole but reasonable discretion.
This letter agreement amends, restates and supersedes, in its entirety, that certain
Agreement Relating to Midland Commitment to Support Debtor Commitment with New Party
under Certain Circumstances among the parties hereto, dated January 14, 2011.
This letter agreement shall become effective only if the Amended Five Mile/Midland
Commitment becomes effective in accordance with its terms.
2
Very truly yours,
INNKEEPERS USA TRUST
(for itself and for its wholly owned
direct and indirect subsidiaries identified
on Exhibit A to the Amended Debtor Commitment)
B y : ~ ~ -
Name:
Title:
Acknowledged and Agreed:
Midland Loan Services, a division of PNC Bank, National Association,
as Special Servicer for U.S. Bank, National Association as Trustee for the Registered
Holders ofLB-UBS Commercial Mortgage Trust 2007-C6, Commercial Mortgage Pass-Through
Certificates successor trustee to Bank of America National Association
By:
Name:
Title:
Very truly yours,
INNKEEPERS USA TRUST
(for itself and for its wholly owned
direct and indirect subsidiaries identified
on Exhibit A to the Amended Debtor Commitment)
By:-----------
Name:
Title:
Acknowledged and Agreed:
Midland Loan Services, a division of PNC Bank, National Association,
as Special Servicer for U.S. Bank, National Association as Trustee for the Registered
Holders of LB-UBS Commercial Mortgage Trust 2007-C6, Commercial Mortgage Pass-Through
Certificates successor trustee to Bank of America National Association
By:
r
Kevin C. Donahue
Senior Vice Pr.:>sident
L Servicing Oificar
K&E 18532826
EXHIBIT G2
Comparison of New Party / Midland Commitment filed
January 14, 2011 against Amended New Party / Midland Commitment
Execution Copy
K&E 18532830
INNKEEPERS USATRUST
340 Royal Poinciana Way, Suite 306
Palm Beach, Florida 33480
As of January 14,March 9, 2011
Midland Loan Services, a division of PNC Bank, National Association
10851 Mastin, 6th Floor, Overland Park, KS 66210
Attention: Kevin S. Semon
Vice President, Special Servicing Manager
Re: Amended and Restated Agreement Relating to Midland Commitment to
Support Amended Debtor Commitment with New Party under Certain
Circumstances
If (i) one or more Termination Events (as defined in the Amended Five
Mile/Midland Commitment (as defined herein)) occur under the Second Amended and Restated
Binding Commitment forRegarding the Acquisition and Restructuring of Certain Subsidiaries
of Innkeepers USA Trust entered into by Five Mile Capital II Pooling REIT LLC (Five Mile)
and Midland Loan Services, a division of PNC Bank, National Association (as Special Servicer for
Bank of America N.A., as Trustee for the Registered Holders of LB-UBS Commercial Mortgage
Trust 2007 - C6, Commercial Mortgage Pass-Through Certificates, Series 2007 - C6) (the
Special Servicer), dated January 14,March 9, 2011 (the Amended Five Mile/Midland
Commitment) as a result of one or more breaches by Five Mile thereunder, and Special Servicer
terminates the Amended Five Mile/Midland Commitment, (ii) on or before the date of the Auction
(as defined in the Term Sheet attached as Exhibit A to the Amended Debtor Commitment (as
defined herein)), Innkeepers USA Trust and(together with its wholly owned direct and indirect
subsidiaries (collectively, the Company) proposes a third party acceptable to the Special
Servicer in its sole but reasonable discretion (New Party) to consummate the Transaction (as
defined in the Amended Five Mile/Midland Commitment) on the same or better terms as
contained in the Amended Five Mile/Midland Commitment, including but not limited to, the
limited guaranty of each of Five Mile and Parent Entity (as is defined in the Amended Five
Mile/Midland Commitment), and (iii) New Party and Lehman ALI Inc. (Lehman) have entered
into a written commitment on the same or better terms as that contained in that certain amended
and restated commitment agreement entered into by Five Mile and Lehman, dated January
14,March 9, 2011 (the Amended Five Mile/Lehman Commitment) which are expressly
supported by Lehman, then, provided that (x) no other Termination Event has occurred (i.e. other
than as a result of a breach or breaches by Five Mile), (y) New Party executes and delivers a
commitment to the Special Servicer in the same form and substance as the Amended Five
Mile/Midland Commitment (containing the guarantees, as referenced above) with such changes
that are required to reflect that New Party is replacing Five Mile and any changes to the
Transaction that are acceptable to Special Servicer in its sole but reasonable discretion (the New
K&E 18172723 2
Party/Special Servicer Commitment), and (z) the Company, Apollo Investment Corporation
(Apollo), New Party, and Lehman confirm in a writing acceptable to the Special Servicer that
they affirmatively and expressly support and are willing to proceed with the transaction as
contemplated in the New Party/Special Servicer Commitment and any corresponding modification
to the Amended and Restated Binding Commitment Agreement regarding the Acquisition and
Restructuring of Certain Subsidiaries of Innkeepers USA Trust entered into by the Company,
Five Mile, Lehman, and the Special Servicer, and Apollo, dated January 14,March 9, 2011 (the
Amended Debtor Commitment), the Special Servicer shall support the Amended Debtor
Commitment and any corresponding modification to the Amended Debtor Commitment so long
as no termination event occurs thereunder or under the New Party/Special Servicer Commitment.
The determination of whether terms are the same or better as described herein shall be made by
Special Servicer in its sole but reasonable discretion.
This letter agreement amends, restates and supersedes, in its entirety, that certain
Agreement Relating to Midland Commitment to Support Debtor Commitment with New
Party under Certain Circumstances among the parties hereto, dated January 14, 2011.
This letter agreement shall become effective only if the Amended Five Mile/Midland
Commitment becomes effective in accordance with its terms.
Very truly yours,
GRAND PRIX HOLDINGS, LLC
By: ______________________________
Name:
Title:
INNKEEPERS USATRUST
(for itself and for its wholly owned
direct and indirect subsidiaries identified
on Exhibit A to the Amended Debtor Commitment)
By: ______________________________
Name:
Title:
Acknowledged and Agreed:
Midland Loan Services, a division of PNC Bank, National Association,
as Special Servicer for U.S. Bank, National Association as Trustee for the Registered
Holders of LB-UBS Commercial Mortgage Trust 2007-C6, Commercial Mortgage Pass-Through
Certificates successor trustee to Bank of America National Association
By:
Name:
Title: